EC Meeting Reveals New Approach To GDS Deregulation

The European Commission appears ready to deregulate pricing controls on global distribution systems but maintain its curbs on the powers of GDSs with airline ownership. The new thinking of the Commission emerged in a meeting between officials and associations representing travel buyers and travelers in Brussels on Tuesday.

The five main conclusions the Commission has arrived at are:

•The CRS (computer reservation system-a synonym for GDS) Code of Conduct, introduced in 1989, is to be retained.
•Rules regarding "double dominance" should be maintained, if not strengthened. Double dominance arises where a national market is dominated by a GDS that is owned or partially owned by an airline also dominant in that market.
•Rules governing pricing are to be scrapped to encourage GDSs to sign up more suppliers, such as low-cost carriers and rail providers.
•Rules preventing GDS screen bias are to be retained.
•There will be no obligation for a carrier to provide full content in GDSs, although it would have to provide the same level of content to all GDSs.

Although sources said not everyone in the Commission sees eye to eye on these conclusions, they still are likely to be framed into a written proposal by the end of this month and formalized before the end of 2007.

"By objective measures, the meeting could not have gone better," said Kevin Mitchell, head of the Business Travel Coalition, one of four representative groups, including the U.K. & Ireland's Institute of Travel Management, the Belgian Association of Travel Management and the International Airline Passengers' Association, that attended the meeting on Tuesday.

"Our team was well prepared and delivered an impassioned appeal for keeping the core protections, removing GDS pricing rules and otherwise streamlining or eliminating most of the Code," Mitchell said. "It would appear from our meeting, and other sources of intelligence from within the European Commission, that our proposal is in alignment with the Commission's current thinking. Of course, the Commission's process is a collaborative one, and as such, changes in direction are possible."

The Commission's current proposals are designed to open up competition and encourage innovation while making sure the market is not distorted by double dominance. Only one major GDS, Amadeus, still has airline ownership and double dominance exists in the home markets of all three of its carrier part-owners: Lufthansa, Air France and Iberia.

The Commission has been reviewing its CRS Code of Conduct since 2003 and its opinion has swung from being against scrapping the code to being in favor and now to wanting to eliminate parts of it, but keep others.