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Signed by more than 100 travel management companies, corporate travel buyers and others in the business travel community, a Business Travel Coalition letter this week is urging members of European Parliament to "correct" the European Commission's standing proposal for global distribution system deregulation.
BTC and its signatories echoed a recent draft report by the European Parliament's committee on transport and tourism, which suggests Parliament should approve EC's proposal, but with 26 amendments. According to one recommendation, EC should broaden its proposed definition of "parent carrier" to preserve certain restrictions on the market behavior of Amadeus' three airline owners.
BTC and supporters--including ABN Amro Bank NV, A.T. Kearney, Dow Europe, DuPont, Inter IKEA Group, Johnson Controls, Northrop Grumman, Philips Electronics--agreed, writing that EC should include Air France, Iberia and Lufthansa in the definition of parent carrier "given their ownership interests in Amadeus and their representation on its board." BTC also suggested that EC require those airlines to "respect the historic safeguards against competitive abuses that have long applied to parent carriers."
Airlines that own GDSs have a history of preferring their systems over competitors through negotiated arrangements with travel management company and corporate users, as well as through access to fares and inventory. The current European CRS Code of Conduct governs such behavior, including a provision that owning airlines must participate in non-owned GDSs at the same level in which they participate in owned systems.
Without amending EC's proposal, according to the BTC letter, "travelers will face a less competitive environment for airfares, and many small/medium-sized travel agencies will find it increasingly difficult to remain competitive while operating rival systems to Amadeus."
Amadeus has said its three part-owner airlines do not exert control over Amadeus. Opponents have argued that EC's current proposal excludes those airlines from rules that should apply to parent carriers. According to the Parliament committee's 18 March draft report, parent carrier should be defined as "any air carrier or rail-transport operator which directly or indirectly, alone or jointly with others, participates in the capital, or effectively controls, or has the legal right to nominate any executive or any member of the board of directors, supervisory board or other governing body of a system vendor, as well as any air carrier or rail-transport operator which it owns or effectively controls."
EC had more narrowly defined parent carrier, as "any carrier that owns or effectively controls a CRS. The provision on effective control means that the ownership condition may not be circumvented by other means, such as for example contractual relations between the airline and the CRS which would provide effective control of the airline over the CRS. This control may be individual or jointly conferred to the carrier with others."
According to rapporteur Timothy Kirkhope, author of the draft report, "Some elements of the Commission proposal are unsatisfactory. The parent carrier definition is misleading ... The risk of abuse is particularly high when a dominant airline participates in a dominant CRS (e.g., which is the case in the French, German and Spanish markets)."
The suggested revisions also would require parent carriers "to provide to the other CRSs the same fare information as to their own CRS." Moreover, the Kirkhope report recommended that "reference to general competition rules should be strengthened. The Code of Conduct complements them, it does not substitute them."
Kirkhope's report generally agreed with EC's standing proposal, which is expected to lead to more competition between GDS (or CRS) operators. Other suggested amendments involved the use of marketing information data tapes, fare displays within global distribution systems and other language clarifications.
The report further stated that:
Other signatories to the BTC letter include travel management companies American Express Business Travel, Expedia Corporate Travel and Garber FCm Travel Solutions, and such associations as the Belgian Association of Travel Management, the Business Travel Coalition and the Institute of Travel Management.
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