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OST-00-6984

Computer Reservation System Regulations

By:  Robert Goldner

Third Extension of Computer Reservations Systems (CRS) Regulations

Delta supports the continuation of the present rules in order to give the Department time to complete its assessment and reevaluation of the CRS regulations. In the last two years, the proliferation of competitive price and service information available via the Internet and other distribution technology has transformed a number of businesses. In the travel industry, the Internet has empowered consumers and businesses with the ability to shop for price and service information without the need to rely on airlines or travel agents, resulting in a significant change in the traditional roles played by consumers, travel agents, CRS companies, airlines and other travel suppliers. These changes require additional study by Department staff in order to formulate the most pro-competitive and up-to-date rules.

In the meantime, however, it is essential that the Department continue the present rules in effect, so that airline, travel agent and CRS competition will continue to be governed by a reasonable and uniform set of rules.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

Computer Reservation Systems (CRS) Regulations

In its Petition for Interpretation and its Filings in Docket OST-97-2881 and related dockets,' Amadeus amply demonstrated that the fare tying issue not only deserves prompt regulatory attention, but that resolution of this problem requires neither substantial modification of Department policy nor (as in the case of the "parity clause" proceeding) completion of the ..global" CRS rulemaking. Amadeus has documented numerous instances of CRS-affiliated airlines refusing to make corporate discount fares available to entities that did not use their affiliated CRS. Several other commenters have also made clear that tying of certain discount fares to use of a particular system is widely practiced. Such tying undermines the core purpose of the CRS rules -- to prohibit bias in favor of those airlines that own or market systems. It also unduly restrains competition in the CRS market and substantially harms consumers by enabling a locally dominant airline to coerce travel agents and business travel departments to purchase the services of the CRS that it owns or markets. Any delay in rectifying the gaping loophole in the CRS rules will result in further injury to competition and to consumers

Counsel:  Steptoe Johnson, David Coburn, 202.429.8063

WORLDSPAN does not object to the proposed extension. A thorough examination of the issues related to the CRS industry and the regulation thereof is a complex and important undertaking and certainly warrants the proposed extension.

WORLDSPAN is concerned, however, that the Department may be considering dealing with certain issues before it completes the overall reexamination of the CRS rules. As it has told the Department on multiple prior occasions, WORLDSPAN is opposed to any suggestion that the Department should abandon the comprehensive analysis of CRS-related issues that is embodied in the Advance Notice of Proposed Rulemaking in Docket No. OST-97-2881. The ANPRM itself makes quite clear that the CRS regulations balance a variety of complex relationships among CRS's, carriers, travel agents and the public. The relevant issues are interdependent and should be addressed comprehensively and at the same time, and not on a piecemeal basis.

Counsel:  Zuckert Scoutt, Charles Simpson, 202.298.8660, cjsimpson@zsrlaw.com

Third Extension of Computer Reservation System Rules

We have reexamined all of the historical justifications for the data sharing rule, going back to 1984. The sole basis for it appears to be that any attempt to restrict the use of the data by a system owner would be unenforceable and, therefore, the conclusion was to compel the sharing of the data with all carriers with the resources to pay for it. The effect of the rule is to provide competing airlines with information that, in the absence of airline ownership of CRS vendors (a condition toward which the industry appears to be moving), carriers would not be able to obtain lawfully in direct exchanges with each other.

Imagine a scenario in which representatives of the major airlines sit in a room together and pass across the table nearly current information about each transaction initiated by a common agency, such that each carrier then learns, in near real-time, what the agent is selling on each carrier in the room. This data includes identity of the customer, the class of service, price paid, date of purchase and the route selected. Can there be any doubt that such an information exchange would be viewed as unlawful as price-fixing, in that its main, perhaps sole, purpose and effect is to stabilize and/or eliminate price competition among the participants in the data exchange? Companies engaged in competitive bidding usually do not know all the details of their competitors' business transactions. Airlines should be in the same position.  

Why then mandate the opposite outcome on an industry-wide basis? The only clearly stated reason that appears in the historical record is that a prohibition on the data exchange would be "unenforceable." Why this should be so is not apparent. The rationale is repeated throughout the evolution of the regulations but never really explained. Why, for example, would it not be possible to enforce a rule that prohibits the generation of information for any CRS owner-airline except information about transactions to which that airline is a party? Violations would be detected when an airline possessed of inappropriate information surfaced a marketing campaign around it. The changes occurring in the distribution of information warrant an immediate look at this rule whose sole effect appears to be the elimination of uncertainty that normally characterizes competitive operations. ASTA therefore asks the Department to schedule an expedited review of section 255.10 while the rest of the proceeding on the overall CRS regulations goes forward.

By:  ASTA, Paul Ruden

Third Extension of Computer Reservation System Rules

By:  Bradley Mims

Third Extension of Computer Reservation Systems (CRS) Regulations

Counsel:  ACA, Edward Faberman, 202.639.7502

Computer Reservations System Regulations

By:  AMEX Travel

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