12 December 2022, etc.venues Monument, London
Business Travel Show Europe, presented by The BTN
21 November, London Hilton Metropole
The next few months will be critical in determining the future of the European computer reservation system industry. Deregulation is in the wind. Its shape, scope and impact are very much in play.
In mid-February, a panel moderated by Business Travel Coalition chairman Kevin Mitchell got together to talk about EU CRS deregulation. This session was delivered at the behest of the Association of Corporate Travel Executives during the annual Business Travel Show in London. The cleavages in how major players view deregulation quickly became apparent.
Gary Hance, chief operating officer for Advanced Travel Partners, a UK-based TMC, says it's important that CRSs work "in harmony with the other stakeholders in the travel business, that they be invisible."
Bruce Charendoff, senior vp government and external affairs for Sabre Holdings, believes deregulation is fine. "We can responsibly reduce the existing rules to just a handful of core protections," he said. Primary among those protections is mandatory participation, which ensures an airline owning a stake in a CRS must provide the same flight and fare information, in the same unbiased manner, to all competing CRSs. That's the sine qua non.
Charendoff believes in the absence mandatory participation, airlines need to divest themselves fully of CRS ownership. "You can pluck it right out of Airline Economics 101," he said. "When airlines own CRSs, they have the means and incentive to distort competition. They have the ability to provide the content to the system that they own, and withhold it - either in whole or in part - from everyone else."
This, he insisted, is no theoretical proposition. It happened in the United States, before CRS regulation. And before CRSs could be deregulated there, the essential pre-condition was that airlines thoroughly divest themselves of their ownership in them. "We have a slightly different view about the potential consequences," said Angel Gallego, Amadeus' director of markets for
Western Europe. In referring to the need to regulate in order to ensure free or fair access to travel content, Gallego says the world is different now. “New technology is allowing new GDSs to come into the market. Those are not covered by regulation.”
Amadeus, it should be noted, is partially owned by three key European carriers: Lufthansa, Air France and Iberia - an ownership stake that Gallego insists is unimportant when it comes to the fair and equitable provision of content to competing CRSs. "If we were to favour one airline against the other, or not provide the best content, we would not be doing any favours for our company," the Amadeus official said.
Sabre's Charendoff is leery about airline ownership of CRSs - in any guise. "In the absence of rules, the cards will always be stacked heavily against corporations, against travel agencies, against independent computer reservations companies, and against other airlines," he maintained. Stacked, he insisted, "in very real and dangerous ways."
It is clear from comments by Frank Laurent, the EC's director general for energy and transport, that the EU is going to adapt in some way to what he calls "an evolving market." Acknowledging the increasing use of non-GDS channels, Laurent said: "We're engaging in a thinking process about modernising the current CRS Code of Conduct."
Laurent won't say what the Commission will propose. It's too early for that. "We're starting consultations soon," he said, "with all options open."
The "all options" comment is precisely what worries players - on both sides of the issue.
The Coalition for Fair Access to Reservations in Europe, of which BTC is a founding member, is all for progress. Indeed, it has nothing against the elimination of some parts of the CRS Code of Conduct. C-FARE believes the thirty or so regulations could be cut to four or five - as long as mandatory participation is not a casualty. It's imperative that an airline which owns a stake in a CRS provide the same information, at the same time, in an unbiased fashion to all competing CRSs.
There's an indelible lesson to be learned from the US experience, Sabre's Charendoff said. Airline ownership, absent core protections by a regulatory authority, results in airline abuse. It's happened before. It could happen again. That is the hard lesson history teaches.
In response to a challenge by Laurent to the industry to "think out of the box," Charendoff proposed a "Sunset" mechanism in legislation wherein the day after all airlines in Europe divest themselves of ownership stakes in Amadeus, the industry would become fully deregulated. The EC would therefore not have to revisit the issue; its work would be complete.
Importantly, right now the EC is beginning a two month "external" consultation period requesting data and market information to help it better render a decision, perhaps an "outside the box" solution. The consultation will be conducted over the Internet via a questionnaire. The EC may attach face-to-face meetings to this data gathering exercise. It's imperative TMC executives and corporate travel managers get involved now. First, become informed. Go to the Websites of the
Business Travel Coalition, the Association of European Travel Agents and Tour Operators, C-FARE. Get the facts. Then, make your opinions known. The public comment period is critical.
One way to participate is through an upcoming BTC filing in response to the EC questionnaire. The Coalition intends to prepare comments and circulate them among European travel managers in a collaborative peer-review process. The resultant filing will be made on behalf to all the signatories to the document.
The window to act is closing fast. New draft regulations could happen by year's end. It should take another year for the new regimen to wind its way through EU Bureaucracy. That means a new CRS world in Europe by late 2008 or early 2009.
The issue is will it be a Brave New World, or a better new world? You have a say. The consequences for getting this one wrong could be catastrophic for competition.
By Jerome Greer Chandler