DOT Gets An Earful On CRS Regs

<B> DOT Gets An Earful On CRS Regs</B>

By Barbara Cook

<i>Washington</i> - Transportation Department officials anticipated that the Internet--an unknown commodity for airline bookings when federal CRS rules were last renewed in 1992--would become an issue this time around. They weren't disappointed.

In the opening round of comments filed last month in the department's omnibus rewrite of the rules, the Internet was about the only new ground to be explored. DOT, meanwhile, extended the present rules to March 31, 1999--a clear indication that the department expects the present revision of the regulations to be a lengthy, and possibly contentious, process. The department said that it fully expects to renew the regulations, possibly with revisions.

Many of the parties filing comments urged that Internet booking sites be subject to DOT jurisdiction. Only airline Websites should be exempt, they said.

Microsoft, which offers online booking through Expedia, argued, however, that it should be exempt as well, reasoning that it does not present airline-driven displays but rather displays of its own choosing.

American Airlines, arguing for inclusion of Internet travel sites in CRS rules, said that practices already have arisen on the Internet that would not be permitted if done by a CRS vendor. The carrier pointed to the example of United Airlines being removed from one Website (American Express) when it reduced its commission levels last year. DOT must ensure that its CRS rules apply to all providers of supposedly neutral fare information, American said.

In its petition for expansion of the current rules, which are largely aimed at prohibiting display bias, ASTA said regulations should apply to any type of CRS-based system used by consumers "to ensure that consumers are not misled into a seemingly neutral site, which is in fact biased against certain services."

ASTA urged DOT not to try "to leap-frog the market in the enthusiastic hope that the Internet will provide an effective replacement for the restraints and incentives to compete that are the essence of the CRS regulations." It added that DOT should "remain alert to the danger" that the Internet's promise of delivering information to consumers "may be subverted by the exercise of market power by huge firms that are new to the marketplace"--an obvious reference to Microsoft.

The Association of Asia Pacific Airlines, representing 19 carriers, urged DOT to require CRS companies to notify the airlines when they offer flight information over the Internet, and to require that Internet displays offer complete information on individual airline services, such as code sharing flights.

Other filings requested that CRS systems be required to offer shorter contracts and that the issue of passive bookings be resolved.

In its September 1997 order instituting the revision, DOT cautioned that if parties request that coverage of the rules be extended to airline information and booking services available to consumers through the Internet, they must be prepared to recognize the differences between the way the Internet and CRSs work. In other words, it said, while consumers can directly use the Internet and see the Websites posted by the airlines, travelers relying on travel agencies for information do not see the CRS displays. Further, DOT noted, travel agencies hold themselves out as unbiased sources of information, while many Websites do not.

"In finding a need for CRS regulation, we have cited such factors as the usual practice of travel agencies of using only one system, the difficulties for them of switching systems or using more than one system, and the time pressures on travel agents that cause them to book one of the first flights shown on a display," DOT said. "These factors seem unlikely to be true for consumer use of Internet sites." As a result, DOT said, parties seeking to impose regulations on Internet bookings will have to present a good case.