EC Adopts Revised CRS Code Of Conduct

The European Commission today adopted a new computer reservation code of conduct that frees up airlines and global distribution systems to negotiate content and fee structures. However, some critics said the commission neglected to adequately address its "parent carrier" interpretation, and the code would give Amadeus and its airline stakeholders a preferred position in some European markets.

Though the commission maintained its definition of "parent carrier" to mean airlines that "directly or indirectly, alone or jointly with others, owns or effectively controls a system vendor, as well as any air carrier or rail-transport operator which it owns or effectively controls," commission officials today said the definition does not apply to Amadeus, of which Air France/KLM, Lufthansa and Iberia own stakes of 23.6 percent, 11.5 percent and 11.7 percent, respectively.

"On a technical basis, we drew the conclusion that in that case it seemed that even a partial ownership of an air carrier on a CRS was not sufficient to establish that this was a parent carrier in the meaning of the regulation," said Benoît Le Bret, head of cabinet for the European Commissioner for Transport, during a press conference today in Brussels.

The Coalition for Fair Access to Reservations in Europe executive director Brandon Mitchener said, "At face value, it has everything we've been asking for for three years." However, C-FARE, an alliance that includes travel companies, buyers, agencies and Amadeus competitors Galileo and Sabre, said the revised code's interpretation would give Amadeus and its three airline owners "a regulatory green light to consolidate their existing dominant positions, restrict access to critical information on their services and engage in other unfair competitive practices to the detriment of consumers and other market participants."

However, commission transport officials in a statement stressed that the revised code "maintains safeguards to protect against competitive abuse by airlines that own or control CRSs" and "contains provisions to ensure an unbiased presentation of travel options in the CRS displays as well as the display of 'all-inclusive' air fares." The code now moves toward the regulatory process through the European Parliament.

Business Travel Coalition chairman Kevin Mitchell in a statement today said the commission "has opened a giant loophole in the coverage of these rules, so that the all-important 'parent carrier' provisions will not apply to the three airline owners of Amadeus, Europe's largest CRS."

C-FARE in a statement said if Amadeus were no longer considered to have parent carriers, those airlines that have a stake in the GDS "could provide more timely fare and seat availability information to Amadeus than to competing systems," while Amadeus could provide those carriers "privileged access to technology for the display and sale of their transportation."

Amadeus has held to its position filed with the EC this April, which states, "The logical interpretation would be to use competition law principles, applicable to EU merger control cases, where effective control is a determining factor. Under these principles, no airline is a parent carrier because none controls Amadeus or any other CRS in Europe. On the contrary, if a 'parent carrier' is any airline that owns shares in a CRS regardless of the size of the interest, then British Airways, through its minority share in Iberia, would be a parent carrier of Amadeus."