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Fearing content fragmentation and a return to the "dark days" of travel distribution history, coalitions of transnational corporations, travel management companies and industry associations urged the European Commission to retain two key regulations governing travel reservation systems. EC currently is considering a possible liberalization of Europe's computerized reservation systems code of conduct and last week closed its public comment period.
"The key rules which should be retained are mandatory participation and a prohibition on commission tying," stated one filing submitted by the Business Travel Coalition and co-signed by 119 organizations. Among the signers were the United Nations, Adidas, American Standard Companies, Bristol-Myers Squibb, Dow Europe, DuPont, IKEA, Kimberly-Clark, Philips, Pfizer, PerkinElmer, Thomson, United Technologies Corp., Carlson Wagonlit Travel and the Travel Management Alliance of regional TMCs in the United States
A petition signed by 163 organizations and submitted by the Coalition for Fair Access to Reservations in Europe (C-FARE) asked EC "to maintain reasonable CRS rules that will ensure fair access to reservations in Europe," including mandatory participation. Global distribution systems Galileo and Sabre are C-FARE members.
EC last week ended a two-month external consultation, during which it invited stakeholders to file comments about the need for CRS regulationgiven the rise in Internet travel distribution and airline divestitures of most distribution systems (except Amadeus). EC received between 40 and 50 comments, which will be posted by next week on EC's Air Transport Portal, according to a spokesperson.
As part of this external consultation, EC today held a hearing that included formal presentations from airline and GDS representatives, and general discussion from other stakeholders. EC is expected to develop a proposed course of action and introduce it to the European Parliament later this year, according to BTC chairman Kevin Mitchell.
EC specifically asked stakeholders to opine on the need for sector-specific competition rules; whether elimination of rules would introduce greater pricing freedom; whether MIDT booking data should continue to be "available to groups of airlines and subscribers;" whether travel agents' identities should "no longer be revealed in the MIDT;" and whether greater pricing freedom with regard to booking fees allows more rail services to be offered on the CRS displays.
Developed primarily to limit anticompetitive behavior by GDS-owning airlines, the European CRS code of conduct was amended twice since it took effect in 1989, the last time in 1999 when rules for rail treatment were added.
Since then, the Internet has certainly changed distribution, but "the CRS remains our strongly preferred channel of travel distribution," according to the BTC filing. "We think partial deregulation is the right direction for Europe, given the current market structure. While many of the existing rules are ripe for reform or elimination, so long as airline ownership of a CRS continues in Europe, some indispensable core protections must be preserved. Failing to keep a strong regulatory framework in place would invite a return to one of the darkest chapters in distribution history when airlines used their ownership stakes in systems to distort competition and prevent market entry both in the airline and the distribution sectors. The result would be utterly devastating to corporate travel programs, and to the TMCs that manage them."
For signatory PerkinElmer, the concern of deregulation "ties into the whole issue of content," said Tom McCabe, director of global travel services and global commodity leader. "Not only is [content] going to be there, but how is it going to be displayed? I was just coming into this industry in the 1980s and I remember the abuses that were so prominent. Partial deregulation is appropriate and would probably be helpful. But there are certain things, as long as airline ownership is there, that are a great risk to consumers," and should continue to be regulated, notably the mandatory participation clauses that require airlines that own part of one GDS to participate in all systems, and the ban on tying commission payments to the use of a particular system.
Carlson Wagonlit Travel favors retention of mandatory participation rules, a spokesperson said, because it "provides the best protection against anti-competitive action, as it would oblige the airline owners to participate equally in all GDSs within their respective home markets, yet deregulate as appropriate in all other competitive markets. Although, we would recommend carrying it further to require that this equal participation be mandatory for parent carriers across all of the EU."
On the topic of MIDT data, CWT "feels strongly that the sale of any relevant booking information to individual airlines is an infringement on the travelers, corporations, and booking agencies' data privacy. The GDS' should not be able to sell this proprietary information in a manner that could be detrimental to the true data owners in the future. Removal of any specific data which could be used to identify a traveler, corporation or travel agency, in any manner, would be an acceptable alternative from our standpoint."
First Amendment rights activist Edward Hasbrouck, working for The Identity Project, wrote that his group "believes that the rules in the code of conduct for CRSs related to the processing and disclosure of personal information contained in reservations are still needed," and that the provisions should be "retained, strengthened and enforced."
Regarding data privacy issues, Hasbrouck asked EC to "keep in mind"--as it considers whether to revise or repeal the CRS code--"that no data protection law or regulations" govern CRSs in the United States. "Under U.S. law, personal data obtained by a CRS or other commercial entity is considered the exclusive property of that entity, in which the data subject has no rights," he wrote. "Once the data is transferred to the United States, the CRS or other entity can give or sell that data to any government, commercial, or other entity, anywhere in the world, without the knowledge or consent of the data subject."
Other signatories to C-FARE's petition included ABN AMRO, AZKO Nobel, FCM Travel Solutions, ING Bank, Ingersoll Rand, KPMG, Nike, Oce Technologies, Omega World Travel, PricewaterhouseCoopers, Unilever and Unisys.
C-FARE also filed specific responses to the nine questions EC asked stakeholders to answer and suggested "Europe's dominant CRS [Amadeus] is not sufficiently independent from air carriers to permit full deregulation at this time."
"The underlying economic incentives that motivate airline owners of CRSs to misbehave remain and the European Union still needs a minimal set of clear, bright-line rules to constrain parent carriers' bad behavior that everyone in the industry knows is inevitable as long as there is airline ownership of CRSs," C-Fare stated in its filing. It recommended "the elimination of all the rules of the Code, except for the core protections against parent carriers' abuses, and the insertion of a 'sunset clause' that would result in full deregulation when the market conditions are right, that is, when all EU-based airlines have completely divested themselves of any financial interest in a CRS."
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