GDS To Alter Key Air Data: Sabre Move May Reduce Airline Poaching Amid DOT's CRS Reg. Review
Citing the enhancement of privacy protection, Sabre Holdings Corp. beginning May 1 will modify the daily booking data it sells to airlines, including the replacement of the passenger name record locator field with encrypted reference data.
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The data do not contain such personal information as names and credit card numbers, said Sabre spokesperson Nanci Williams, "but we're still being ultra-conservative and trying to make sure you can't match A and B to get C." She added that airlines will not hold the key to decode the data, known as MIDT or marketing information data tapes.
Officials from the other global distribution systems said the move is under review.
One use of PNR locator data is the practice of poaching, by which airline sales personnel entice travel agents to convert premium passengers who have booked or bought tickets on a competing flight by lowering the airfare and/or paying the agent.
Sabre's decision likely was prompted by poaching, according to Mike Malik, president and CEO of Bradenton, Fla.-based MIDT data processors Shepherd Systems, a unit of Parsippany, N.J.-based Galileo International, part of Cendant Corp.
"We use the PNR record locator as a reference point in a number of our decision-analysis systems," Malik said. "We don't think Sabre's decision will affect those systems, but there was abuse of this data that led to this action, and we wholeheartedly support Sabre's decision. I don't think that going down to fine granularity to identify the individual is appropriate, but that's exactly what airlines have done. It will now be more difficult to use Sabre's data for poaching."
Malik said Shepherd's Pocketflash product is not designed for poaching, despite its capability—as described on Shepherd's Web site—to enable airlines to "identify last-minute reservations of high-yield passengers who may be convinced to shift to your airline." A similar company, Houston-based DOB Systems, offers products that, according to its Web site, provide carriers with "passenger-booking information for competitor flights departing in the near future."
Such services ostensibly are designed to coach agencies into feeding preferred supplier arrangements.
"There are two sides," said Al Lenza, vice president of distribution planning for Northwest Airlines. "Some agencies welcome the opportunity to move business, but others view it as a violation of privacy." Lenza and another high-ranking major airline official said Sabre was unreceptive to the idea of having agencies opt in on providing airlines their data.
Though higher yield business travel is a natural target for such activity, more than a dozen industry executives interviewd for this article stopped short of saying sales reps regularly undermine corporate travel policies by paying agents to move existing bookings—but most said they wouldn't be surprised if that has happened.
When it comes to managed travel, said a former airline sales manager, "We're not interfering, we're just saying we have that info, so why are you booking elsewhere?"
Regarding poaching, Ed Faberman, executive director for the Air Carrier Association of America, said, "There might be some legal questions on that, perhaps some unusual scenarios where an agency or corporation loses its ability to do business. But there is an awful lot of flexibility in defense. You can point to the government regulations requiring the data, so I'm not sure there's a case in that environment."
Faberman's ACAA is angry that the data and tools to interpret them can be prohibitively expensive for small carriers, running tens of thousands of dollars per month, although Galileo and Sabre recently have come up with modified products for smaller carriers.
American Express, Austin Travel, the National Business Travel Association and Radius in recent years joined ACAA and the American Society of Travel Agents in criticizing the U.S. Department of Transportation's regulation requiring each GDS to "make available to all U.S. participating carriers on nondiscriminatory terms all marketing, booking and sales data relating to carriers that it elects to generate from its system. The data made available shall be as complete and accurate as the data provided a system owner."
DOT's rules governing the GDSs have been extended four times since the end of 1997. Just over two weeks ago, in again proposing to put off the expiration of rules by a year to March 31, 2003, DOT wrote that it would "consider acting more quickly on specific issues as necessary," including, among others, requests for "expedited action on an amendment that would bar or restrict systems from providing booking and marketing data to airlines."
Unconvinced that DOT would take action, Faberman praised Southlake, Texas-based Sabre for "recognizing the potential harm" of the data, but warned that, "If this thing only goes 20 percent of the way, the last thing we want is DOT to use this as another excuse for not taking action. Frequently, we've seen this industry put up certain offers or take some limited steps to prevent the government from doing what they should do. We won't relax until we're sure the data will not be usable the way it has been in the past."
Sources were divided on whether Sabre's new encryption truly would end poaching. "It would help a lot, because then you can't point the agent to the record, which makes it somewhat toothless," said a former airline exec. But Melville, N.Y.-based Larry Austin of Austin Travel remained incredulous.
Encryption can be broken, reminded Nick Bredimus, president of Dallas-based Bredimus Systems, which offers airlines consulting and technology relating to GDSs. "The PNR address can be defeated due to the natural patterns in the fields and the number of known PNR addresses available in clear text," Bredimus said. "Code breaking is quite easy in this case. I am assuming that there would be no legal issue preventing an MIDT user from decrypting the field."
"So why not just leave that data out altogether?" asked a corporate travel buyer.
According to Bredimus, some less questionable uses for the PNR locator data field could be impaired if Sabre were to delete them. He guessed that Sabre's reference data may be designed to help airline data processors identify and net out duplicate records for the purposes of matching GDS data with their internal host system data. The value of making that match is "greater than the sum of the two," he said. "Poaching is probably among the top three things people would do with it, but that doesn't mean there isn't more potential value elsewhere."
Shepherd's Malik acknowledged that identifying duplicates could become more difficult, but he said, "We're looking at ways to handle that. It's one of the things that we don't know until we know exactly what Sabre will do."
Bredimus suspected poaching is not sanctioned by airlines, but he noted that, "MIDT is just a way to easily get it down to the salesman's level." According to a source at one major carrier, which blocks salespeople from seeing the advance booking data, "All they have access to is post-departure, and we laid out specific rules about what they should do. I would think if you're a sales rep, you won't be targeting those with managed programs because you might get caught."
ASTA in a March 14, 2000, filing with DOT requested an expedited review of the MIDT rule. "Companies engaged in competitive bidding usually do not know all the details of their competitors' business transactions," wrote ASTA. "Airlines should be in the same position. Why, then, mandate the opposite outcome on an industrywide basis?
"The sole basis for it appears to be that any attempt to restrict the use of the data by a system owner would be unenforceable and, therefore, the conclusion was to compel the sharing of the data with all carriers with the resources to pay for it," continued ASTA. "Would it not be possible to enforce a rule that prohibits the generation of information for any CRS owner-airline except information about transactions to which that airline is a party? Violations would be detected when an airline possessed of inappropriate information surfaced a marketing campaign around it."
American Express agreed with ASTA's position, stating that DOT's regulations hadn't kept up with technology that was now reporting data on a nearly real-time basis (BTN, March 22, 1999). "A carrier, so disposed, is able to use this real-time and in-advance data for predatory pricing, blocking new entrants from the marketplace, signaling and other anticompetitive activity," wrote Amex. "What began as a tool to promote competition has become a weapon to eliminate it."
The National Business Travel Association in 2000 told DOT that it "recognizes the intent of DOT to facilitate a system that would make it possible for participating carriers to openly exchange information and data. However, the advancement of technology has opened the door for carriers to potentially use competing information in a discriminatory fashion."
DOT's computer reservations system rules would expire at the end of this month, absent DOT's proposed extension. Interested parties now have until March 18 to file comments.
~Additional reporting by David Jonas