Air India tells HC no favouritism in passenger service system contract

Responds to suit by Amadeus rival Sabre challenging the tender process, says selection of costlier Amadeus bid will give it an edge over peers

Air India has defended the selection of the pricier Amadeus bid for its passenger service system (PSS). This will give the airline an edge over its peers.

The national carrier made its submission in the Delhi High Court (HC) on Wednesday after rival firm Sabre challenged the tender process, alleging favouritism in the PSS contract. Sabre has claimed acquiring its product will save the airline Rs 900 crore.

The court has pushed the matter to July 22 after Sabre sought time to file its reply.

A PSS covers a wide range of functions, including flight scheduling, ticket reservation, e-commerce, loyalty programme, and departure control. 

Air India invited bids for a new seven-year PSS contract in March as its existing agreement with SITA is due to end next year. Significantly, SITA is exiting the PSS business altogether.

Sabre and Amadeus submitted bids and Air India selected Amadeus for the contract. Aggrieved by the airline’s decision, Sabre moved Delhi HC against the decision. The court, however, did not grant it any interim relief and the letter of intent was issued on July 1.

In its petition, Sabre claimed that the airline changed the evaluation criteria and introduced certain bid conditions to suit Amadeus. Sabre said that selecting its product will save the national carrier Rs 900 crore and called Air India’s decision “arbitrary and unjust”.

While Sabre’s financial bid was Rs 1,144 crore, Amadeus quoted Rs 1,957 crore for the contract. Subsequently, Air India has secured certain additional discounts and fee waiver from Amadeus.

In its affidavit, Air India said it adopted the quality-cum-cost-based selection (QCBS) criteria for the tender process and Sabre’s overall score under this method was less than Amadeus’.

“There is always a hidden opportunity cost involved in taking a system which is not up-to-date, advanced, and scalable. A system which fails to provide an edge to its user leads to shifting away of business to its rivals creating opportunity cost in form of lost revenue,” Air India said, justifying its decision to select the higher-priced Amadeus offer.

“The petitioner (Sabre) was not only aware, but had accepted the QCBS procedure. Now that the petitioner’s bid wasn’t selected in a process which was conducted transparently and fairly, they have belatedly decided to question the procedure,” the airline said, seeking dismissal of the petition.