Takeaway: Jetblue moves away from OTA's (& GDS) to reduce third party fees

Jetblue announced today (HERE) that the company is ending ticket sales through ten OTAs. As a reason for the change, the company cites:

"The distribution cost structure through third-party channels makes it challenging to offer a full range of fares. By eliminating lower-yield online travel agencies, JetBlue will not only support its structural cost efforts but also help ensure that customers traveling with JetBlue have the best experience possible since direct bookings deliver benefits to customers"

Jetblue already tries to use its own website as the main bookings channel for inventory, and actually contracted with Sabre GDS many years ago to help them drive more bookings for business travelers via travel agencies. We expect this effort to be mostly unaffected by the current announcement, although the general strategic path announced today of focusing "on direct bookings through jetblue.com" potentially puts some l-t pressure on other channels. 

"...business customers are more likely to book through a travel agency or a booking product which relies on a GDS platform. Although the cost of sales through this channel is higher than through our website, the average fare purchased through GDS is generally higher and often covers the increased distribution costs. We currently participate in several major GDS and online travel agents, or OTA. Due to the majority of our Customers booking travel on our website, we maintain relatively low distribution costs despite our increased participation in GDS and OTA in recent years" (Jetblue 2016 10-K)

Bottom line, Jetblue's announcement will impact the direction of Sabre's GDS bookings growth in 2018, if perhaps not dramatically. More importantly, the announcement is yet another signal from the industry that airlines will turn to GDS fees and other 3rd party booking fees as opportunities for cost flexibility. 

[Jetblue is a customer of Sabre's for several non-GDS programs in the Airline Solutions business (Integrated Flight Operations, Crew & Resource management, etc) that should be unaffected by this announcement.]

(small boom, but relevant)