What the Sabre-Farelogix Antitrust Trial Could Reveal About Airline Technology
Skift Take
It's notable that we had a much easier time finding experts who supported Sabre's proposed merger of Farelogix than opponents. But this court case will be decided on legal nuances, and its outcome is impossible to predict. We pity the judge who has to endure this crash course in airline technology and distribution.
The U.S. Department of Justice on Monday began arguing its antitrust lawsuit against Sabre over the travel tech company's planned $360 million acquisition of Farelogix, a technology business.
In courtroom 6B of Delaware District Court, Judge Leonard Stark has begun to hear a complicated case.
Justice Department attorneys allege Sabre is attempting to take out a rival. Sabre denies that. It counters that Farelogix belongs to a sector of tech providers of airline merchandising services and direct connections that is dynamic, with many recent entrants. Sabre also argues that it has the resources to enhance Farelogix, which would, in turn, rev up the pace of broader industry innovation.
Testimony over the next nine days promises to shed light on how Farelogix fits into the broader airline distribution landscape. It will also show whether the Justice Department has evidence that Sabre's executives had ill intent in purchasing the company. The court may suss out if airlines have only half-hearted interest in technological innovation, compared with a full passion for strong-arming the tech middlemen over fees. Overall, the judge aims to determine whether this deal might ultimately harm consumers.
The case will likely turn on the nuances of antitrust law.
Rather than handicap the legal issues, Skift asked industry experts for their preferred outcomes from the perspective of business strategy. The responses crossed the spectrum, but we found it easier to get supporters of the deal talking on the record than opponents and easier to find supporters than opponents in general.
Some Arguments for the Merger
Several experts preferred for Sabre to get Farelogix.
Many experts we interviewed said Sabre and Farelogix were not competitors in the same, relevant product market.
"I don't see Sabre and Farelogix as competitors and, even if they were, there would be no damage to anyone from the merger that a free market wouldn't undo in a relatively short time," said Jeff Klee, CEO of Amtrav, which provides technology and agents to help manage business travel, and CEO of online travel agency CheapAir.
For some, the issue was resources. Sabre has the resources to make Farelogix an even better service to help airlines sell their tickets more creatively, known by terms like "merchandising" and "order-and-offer management."
Several experts said they thought that the managers and leaders at Farelogix, founded in 1998, feel tired and under-capitalized.
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