American Again Fights the Good Fight

DALLAS ( TheStreet) -- Hardly anyone in the airline industry doubts that American Airlines ( AMR) is fighting a noble battle against against global distribution systems, vast computer systems that book and sell travel accommodations.

It is just not a battle that any of American's peers want to fight.

And so, once again, American will go it alone, at least for a while, even if it has a short-term cost to pay, which analysts contend it does. "In the short run, AMR's ongoing battle with GDS middlemen favors its competitors, who are displayed on all GDS and most on-line travel agency systems," wrote CRT Capital Group analyst Mike Derchin, in a recent report.

This is familiar territory, of course, for the only major network carrier never to have declared bankruptcy -- a strategy that has enabled high profits at peers who were able to dramatically reduce costs. American will likely be the only major carrier to lose money in the fourth quarter.

But again, American stands on principal. "This company stands for something, more than just any old company," CEO Gerard Arpey declared in a 2010 interview. "Gradually, it will emerge as a successful company that honored its commitments and its pension obligations and that was guided by principles of doing what's right.

"We take a long-term view," Arpey added. "We presume that we'll still be running the company a long time from now and the shareholders with us now will be with us then, and the shareholders will judge (what) we've done for the company and the other constituents."

Of course, American stands to gain financially from eliminating the middle man in its ticket sales. Cory Garner, director of distribution strategy, said the various GDS systems charge the carrier hundreds of millions of dollars a year for distribution. Travel agents use the systems -- Amadeus, Sabre and Travelport -- to book tickets. "We want to cut out the middle man between us and the travel agents," Garner said, in an interview. "We want to distribute in a less expensive way that can also accommodate optional services."

At the same time, Garner noted, "the global distribution systems are outmoded." In many ways, technology has passed them by. Today, customers can find their own low fares on the Internet and American can more easily distribute tickets to travel agencies. "We want to deal directly with travel agents," Garner said. "We want to deal with global distribution systems, but as technology providers rather than gatekeepers."

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