Community Interview Synopsis

Travel Software – Amadeus IT Group & Sabre Corp

  • Public Equity
  • TMT
  • North America

In this investor-led Community Interview, a former executive at Sabre compares travel software companies Sabre Corp and Amadeus IT Group, and discusses industry issues including product differentiation, commercialisation strategies, market share dynamics, and the positioning of smaller, niche players who are eating into ancillary revenues

Competitive analysis of travel software companies Sabre Corp and IT Group

The Interview started with the investor asking the specialist to compare Sabre and Amadeus from an airline IT standpoint – the passenger service system (PSS) they provide.

Overall, the expert believes Amadeus’ PSS is stronger, putting this down to the way the companies built their products. As an American Airlines spin off, Sabre continued custom building PSS products for airlines – but we heard that this made upgrades challenging because only those who created the upgrades truly understand how they work. Amadeus, however, created “building blocks” that define the core PSS elements, with users able to customise the interface, the expert said. 

Meanwhile, the Interview revealed that PSS ancillary products, such as revenue management and flight scheduling, are becoming more relevant, now representing 25-30% of revenues on average. 

Although Sabre and Amadeus have been working on such products, the specialist said their success has been limited to date. “There are other players, small IT houses, that can also develop something like that, and you don’t need to pay the high fees that Sabre and Amadeus do [charge],” they said. 

Also view Sabre and Amadeus’ value chains on Third Bridge Maps here and here respectively. 

The Interview also revealed that many airline executives view Sabre and Amadeus as an oligopoly, with sometimes long wait times and high costs. Smaller players like Pro and Accelya, however, have proven to be flexible, nimble and quicker to respond, the specialist said. “They are super user-friendly, and they have specialised in niches. This is very, very important because they don’t try to compete with Amadeus and Sabre in everything that the big guys do.”

On the other hand, the scale and depth of expertise that Amadeus and Sabre have means “any need that an airline could have, they will solve it in a way”.  

Both Sabre and Amadeus are facing challenges within their global distribution system (GDS) business and have been venturing into other areas. Compared with GDS historically, PSS has not been a significant revenue driver but ancillary products are now “super interesting”, the expert said.

Community is Third Bridge’s investor-led transcript product, part of our integrated research offering that also includes: Forum, analyst-led Interviews; Maps, a value chain product; Primers and Tearsheets, for fundamental information on private companies; and Connections, an expert network service.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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