Case | HBS Case Collection | January 2009 (Revised June 2009)

Distribution at American Airlines (A)

by Benjamin Edelman

Abstract

American Airlines sought to reduce the fees it pays to global distribution services (GDSs)—such as SABRE—to reach travel agents. But GDSs held significant tactical advantages. For example, GDSs had signed long-term exclusive contracts with the corporate customers who were American's best customers. Furthermore, travel agents tended to favor whichever GDS offered the highest commissions—impeding price competition among GDSs. Against this backdrop, American considered how best to cut its GDS costs.

Keywords: Price; Globalized Firms and Management; Governing Rules, Regulations, and Reforms; Distribution; Service Operations; Competition; Air Transportation Industry; Travel Industry;

Citation:

Edelman, Benjamin. "Distribution at American Airlines (A)." Harvard Business School Case 909-035, January 2009. (Revised June 2009.) (request a courtesy copy.)