Washington, D.C. - The airlines' use of booking data received what one participant called a "curious" amount of attention from the U.S. Department of Transportation during a hearing last month with industry officials. The one-day meeting, in which regulators asked questions and heard arguments on its global distribution system regulations, featured no statement from a corporate travel representative.
Nevertheless, master of ceremonies and DOT deputy assistant secretary for aviation Michael Reynolds—citing a key issue for the likes of American Express and the National Business Travel Association—asked eight times about the booking data that DOT requires GDS companies to offer participating carriers.
DOT is considering limitations on the data as part of an effort, with the White House Office of Management and Budget, to rewrite the GDS rules by Jan. 31, 2004. Today is the deadline for filing final comments on DOT's proposed changes
(BTN, Dec. 9, 2002).During the public hearing, Reynolds particularly was interested in alleged abuses of MIDT, Marketing Information Data Transfer, data. According to travel industry attorney Mark Pestronk, DOT should be concerned about the following scenario: "A sales representative from an airline will say to the travel agency executive, 'I see that you have 50 travelers going to the Orient next month on the other airline. Why don't you put them on our airline, and we'll give you the following inducement?' "
Delta Air Lines' representative said such allegations are "simply false."
Hershel Kamen, staff vice president of international and regulatory affairs for Continental Airlines, said it is "simply not true that airlines use MIDT to poach customers from their competitors."
That's news to corporate travel experts reached by phone following the hearing.
"Only 10 days ago, I got a call from Continental," asking for existing bookings on another carrier to be shifted to Continental, said Caro Cook, senior transportation officer with the International Monetary Fund. Cook said she has received similar calls from other carriers.
"In April, we had two full-coach passengers booked O'Hare to Honolulu on airline A," added Chicago-based Tower Travel Management president John Smith. "Then our representative from airline B contacted us based on the GDS data and offered one-way, first-class upgrades to switch."
At the hearing, Continental's Kamen said, "There has never been an enforcement complaint alleging such activity nor has any serious investigation of such charges occurred."
Such enforcement is difficult, argued American Society of Travel Agents senior vice president of legal and industry affairs Paul Ruden, because "if a travel agency were to complain to a public body, like a court, about abuses or what the agent judged to be abuses of this MIDT data, the first thing that would happen, typically, is that the airline would terminate the agency relationship."
MIDT data most often are used for the development and monitoring of agency and corporate incentive schemes. "We provide the systems and services to monitor those performances, so yes, a majority of our business is focused toward that," said Mike Malik, purveyor of MIDT data and analysis services for Bradenton, Fla.-based Cendant subsidiary Shepherd Systems.
Yet, at a time when many bookings now are being processed outside the GDS-based realm of MIDT, airlines already are pursuing alternatives to it in their relationships with ARC, Prism Group and others
(see story)."It would seem that the airlines' campaign to avoid booking fees through direct connect technology, among other things, is actually reducing the availability and scope of the MIDT data generated by the GDSs," Ruden said. "The airlines are thus arguing that they cannot live without the data, while simultaneously reducing their own access to it as well as its value."
Ruden and others acknowledged the data is useful to carriers for network planning.
"We rely on it in making competitive decisions," said Delta Air Lines senior attorney J. Scott McClain. "There is no adequate substitute for this data." McClain claimed that Delta needs the data despite having just said that less than half of its revenues now are generated by agencies, whose bookings produce most of the data in MIDT.
As for schedule planning, Southwest Airlines noted it gets along just fine without MIDT. The carrier's position is that there is "no legitimate competitive need" for MIDT.
On other key issues, Reynolds gathered background information on Internet-based versus traditional distribution channels; prodded panelists to answer questions about GDS costs, fees and recently announced fee-reduction programs; questioned the competitive ramifications of airline-GDS ties in terms of both ownership and marketing; and sought feedback on whether and in what ways GDSs have market power.
Reynolds also asked for opinions on whether DOT's aviation authority even grants it the power to regulate distributors.
To find more than five years of detailed industry commentary regarding the ongoing GDS regulatory review, search for docket number 2881 at: http://dms.dot.gov/search/searchFormSimple.cfm.