European Technology & Travel Services Association's Emmanuel Mounier talks:
- Issues in Europe's air travel distribution market
- Simplifying & clarifying regulations in travel accommodation & taxation
- Google's dominance in travel search
The European Technology & Travel Services Association has been lobbying the European Commission to take action against airlines it accuses of violating the EU Code of Conduct for Computerized Reservation Systems. ETTSA represents global distribution system operators like Amadeus and Travelport; online travel agencies like Booking.com and Expedia; travel management companies like American Express Global Business Travel and CWT; aggregators and metasearch companies like Skyscanner; and information and tech providers like OAG. The Code of Conduct referenced regulates the commercial relationships between GDSs, airlines and travel agencies in Europe. ETTSA secretary general Emmanuel Mounier spoke with BTN assistant editor Dawit Habtemariam about the group's lobbying efforts.
BTN: In February, mega TMC CWT joined ETTSA. What has been the association's selling point to attract new members and partnerships?
Mounier: The air distribution market in Europe has undergone a lot [of changes] this past year, and we are trying to bring the European Commission to regulate it in a more efficient way. The players in the market see that when it comes to regulating air content, ETTSA is acting on their behalf. Finally, a Code of Conduct for Computerized Reservation Systems is under review and so will be revised in the two coming years. It's very key for all the players to have a part in the discussion and the political situation.
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BTN: ETTSA has opposed Lufthansa's direct distribution tactics and has lobbied the European Commission to label Lufthansa's direct distribution channel as a computer reservation system. Will that label kill the trend toward direct distribution?
Mounier: You are referring to the complaint we filed in 2015 against Lufthansa for the surcharge. We complained that the agency portal provided by Lufthansa should be considered a computer reservation system under the Code of Conduct. There are two problems. First of all, Lufthansa Group is Austrian Airlines, Swiss International Air Lines, Brussels Airlines and Eurowings. So a booking tool is comparing offers from [all these airlines as if they're in] competition when actually, everything is controlled by one group. We were able to flag this issue to the Commission. The Code of Conduct in 1989 [was] adopted because distributors were owned by the airlines: Amadeus by Lufthansa, Sabre by American. They could bias the GDSs, and therefore, they could prevent new entrants from entering the market. Today, we have dominant airlines which are not owning the distribution channel but when it comes to aggregators like Travelfusion,they are controlling what they distribute. They are deciding what is displayed by the distributor, what they connect with a travel agent and what's on display. This was the very issue that was addressed with the Code of Conduct. It needs to be regulated. Basically, the airlines are trying to produce distribution channels that they control. Even if they don't necessarily own them, they control what they distribute in order to limit transparency to the detriment of consumers and subscribers, travel agents, in order to limit competition and more importantly, to protect their position in the market from new entrants.
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BTN: What issues have you zeroed in on?
Mounier: Surcharges [on bookings that go through the GDS], additional discrimination practices between channels of distribution by the big airlines, withdrawal of content from GDS channels. We are also seeing some marketing and advertising restrictions [of distribution on OTAs and metasearch engines] being imposed by airlines, so it's very worrying for the distributors but also for the consumers, the travelers. Working with trade associations in Europe like GBTA, we want to preserve the content of the travelers, players and distributors of the air travel distribution market.
RELATED: GDSs, Surcharges, TMCs, NDC, APIs: What the Heck Is Going On in Europe? (published on BTN in November 2017)
We also work on travel accommodation distribution. There was a big discussion on [whether OTAs' rate parity clauses with hotels, which require hotels to give OTAs the same room rates that they give to other distribution platforms] should be banned. It was stated clearly by European legislators that such narrow parity clauses are fully compliant with the EU competition rules and are actually needed to allow competition to thrive in the market. We were happy with the outcome.
We also have short-term-rental issues. How many nights can you rent your property? How many properties can you put on the market as an individual? We are following that very closely. In Europe, there is a big issue around the fragmentation of rules in this regard, and [they are] getting more and more complicated for platforms and our members to do business. We believe legal certainty is good for everybody, including corporate travel managers and consumers.
Finally, there is a global discussion on how to tax digital services [like internet marketplaces]. These services are difficult for the different [EU national] tax authorities to handle because they are located in one country and do business in another country. Where is the value produced? It's complicated. Some European Union members states have decided to impose a tax without waiting for the resolution of the discussion [of proposals at the EU level and at the Organization for Economic Co-operation and Development level]. We will take part of the discussion because we believe you need to have one unique approach at the EU level. If you impose a national tax [in addition to an EU tax], there is a high risk of double taxation and of inconsistent regulations between the member states and risk to make business more complicated for everybody. We will also look at the international level for a consistent framework for the taxation of digital services.
BTN: What else is on ETTSA's mind?
Mounier: We are pushing the [European] Commission to adopt regulations against Google because they are more and more aggressive and they more and more are trying to leverage their dominant position in search to gain market share in travel. Google Flights and Google Hotel are more developed and opening up more and more opportunities. That's possible only because of its dominance of search, and in our view, that is to the detriment of travel because these tools are not neutral. They are advertisements represented as search results, and that's hazardous to consumers, for the travelers, which the commission acknowledges. We would like to see the commission take action on this practice.
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