September 2022, Virtual
September 29 2022, Virtual
Now in its 27th year, the Business Travel Awards
There seemed to be a strong air of optimism from the four members of the delegation which met senior executives from the EC's Directorate General for Transport and Energy (DG TREN) in Brussels last week on GDS de-regulation. The joint press release issued by Kevin Mitchell of the Business Travel Coalition (BTC), Jonathan French, International Airline Passengers' Association (IAPA), Nora Buysschaert, president of the Belgian Association of Travel Management (BATM) and Paul Tilstone, executive director of the Institute of Travel Management (ITM) said: "By objective measures the meeting could not have gone better."It would appear from our meeting, and other sources of intelligence from within the EC, that our proposal is in alignment with the Commission's current thinking."The group is among various stakeholders with whom Olivier Onidi, head of unit at DG TREN, and his colleagues are currently meeting on this thorny issue.The issue is what - if any - changes the EC plans to make to the 1989 CRS Code of Conduct which controls how GDSs operate in Europe. Its decision, expected around November 2007, could have a fundamental affect on distribution in the continent.The delegation made five key points to Mr Onidi:
1. the basic importance of access to content, which it described as "coin-of-the-realm", for travel management companies, GDSs and travel buyers.
2. that "GDS-owning airlines have â€¦a strong financial incentive to tilt the competitive playing by withholding content. A consequence can be the creation of a marketplace where both an airline and GDS dominate, so-called "double-dominance markets."
3. the fundamental need, as stressed by IAPA, that the "CRS rules ensure consumer choice in air travel" so the market is consumer driven rather than supplier driven.
4. the need to "maintain mandatory participation; maintain the ban on commission tying; eliminate GDS pricing rules; maintain the ban on screen bias; and streamline or eliminate the balance of the rules."
5. that the benefits of such a solution would be consumer protection with the BATM claiming that "an efficient and competitive marketplace will become more so with smarter regulation."
This indeed would constitute an ideal de-regulation of the GDSs: fewer, streamlined rules but with safeguards firmly in place to prevent any abuse. But it is not as simple as that.As Michel de Blust, general secretary of the Guild of European Business Travel Agents (GEBTA), has pointed out, the Commission is wrestling over what exactly constitutes a "parent carrier" and whether the 46.4% stake that Air France, Lufthansa and Iberia hold in WAM Acquisition, the owners of Amadeus, constitutes control of the powerful GDS. If they are not parent carriers, GEBTA believes the "obligation regarding mandatory participation falls" which could open the way for full de-regulation.The ITM also made the point at the Brussels meeting that there are other aspects of the distribution process that can work against a level playing field.Among these are the basic point that airlines did not need to own a GDS to influence the choice of CRS by a travel management company, it merely had to be dominant.It gave as an example BA in the UK, but Air France, Lufthansa and Iberia in, respectively France, Germany and Spain could equally have been cited.ITM also pointed out that other situations where a TMC or OTMC is owned by GDSs or where self booking tools are owned by GDSs.An example here (not given by the ITM) is Sabre Holdings which owns Sabre Travel Network (the GDS), the online agency Travelocity and the corporate booking tool GetThere. ITM, on the basis of its research programme, also advanced into the murkier area of overrides and sales and marketing agreements between airlines and TMCs with more than half of its buyer members (52%) believing that this type of financial relationship "encourages bias." Finally ITM, again on the back of its research, said that 34% of its buyer members thought that the financial relationship between GDSs and TMCS also resulted in biased content being offered.Paul Tilstone, executive director of ITM, said after the meeting: "The Commission seemed very interested in our research and subsequent challenge that there were many influencing factors in the distribution chain which may result in the business travel consumer not receiving the best choice at the point of sale."It is the interests of the consumer which is at the heart of their review."