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OST-02-11577

 


Computer Reservation System Regulations

OST-02-11577 February 12, 2002 Proposed Extension of Expiration Date

Federal Register Publication from 2/15/02

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Computer Reservation System (CRS)

The Department is proposing to amend its rules governing airline computer reservations systems (CRSs), 14 CFR Part 255, by changing the rules' expiration date from March 31, 2002, to March 31, 2003. If the expiration date is not changed, the rules will terminate on March 31, 2002. The proposed extension of the current rules will keep them in effect while the Department carries out its reexamination of the need for CRS regulations. The Department has tentatively concluded that the current rules should be maintained because they appear to be necessary for promoting airline competition and helping to ensure that consumers and their travel agents can obtain complete and accurate information on airline services. The rules were previously extended from December 31, 1997, to March 31, 1999, then to March 31, 2000, then to March 31, 2001, and most recently to March 31, 2002.

The Department recognizes that our reexamination of the rules should be completed as soon as possible, and the staff is moving forward promptly to bring the rulemaking to completion. Our rules must be updated to reflect current industry conditions, and we must consider whether the rules should be extended to the Internet, which is becoming increasingly important in airline distribution. CRS-related issues may arise that may require a decision before we complete our overall reexamination of the rules. The importance of some issues related to Orbitz, for example, caused us to review Orbitz' business plan before it launched its service to the public, and we are conducting a further review of Orbitz to see whether its actual operations present competitive issues. When expedited action is needed on other issues, we will address them promptly. We are aware that several parties have requested expedited action on specific proposed revisions to the CRS rules, such as rules limiting airline booking fees and giving travel agency subscribers additional rights to cancel CRS contracts.

We recognize that the airline distribution system and the CRS business are changing. The Internet's role in airline distribution is growing rapidly. Two of the systems -- Sabre and Galileo -- are no longer controlled by airlines. American and Southwest market Sabre, however, and United markets Galileo, so these two systems each have significant airline ties which could potentially lead to deceptive or unfair competitive practices if our rules expired. Whether the rules should be readopted in light of the changes in system ownership is, of course, an issue that we are carefully considering in our reexamination of the rules. 65 FR at 45554, 45556. As stated above, we recognize the importance of updating the rules to reflect all such developments.

By:  Read Van de Water


Computer Reservation System Regulations

OST-02-11577 February 27, 2002 Comments of the National Business Travel Association Extension of Computer Reservation System Rules

For the past decade the travel industry has been introduced to new and dynamic distribution channels that promise to revolutionize the way travel services are sold by suppliers and bought by consumers. While these systems have contributed to visible reductions in travel costs, they have also opened the door for consumer and corporate abuses.

While the CRS rules instituted a decade ago were not established in an effort to address consumer and corporate concerns, the recent emergence of new on-line distribution channels have created abuses that have directly impacted consumers and corporations. The historical neutral and intermediary nature of customer reservation systems has been replaced with systems that are inherently biased and damaging to consumers and corporations ability to freely and securely shop for travel services.

The rules set forth in 14 CFR Section 255.10 allows a dominant hub carrier, through purchase of global distribution system (GDS) transaction tapes, to obtain information about other carriers' transactions including the class of services, price paid, date of purchase and route selected. The current rules allows carriers to monitor the ticketing activities of travel agencies and major corporations, which not only damages corporate negotiations, but also creates privacy issues between the corporation, carrier and the travel agency. Under these rules, the corporation will have no control over how an airline uses their data and the proprietary nature of the data. The current rule unmasks the travel patterns and tendencies of corporations, allowing airlines, including ones a corporation is not contracted with, to sell and purchase a company's travel data.

By:  National Business Travel Association, Marianne McInerney, 703.684.0836


Computer Reservation System Regulations

OST-02-11577 February 22, 2002
Docketed March 7, 2002 
Comments of First Class Travel Extension of Computer Reservation System Rules

I am enclosing printouts from my CRS (Amadeus) and U S airways web site for fares involving travel from Boston to Philadephia in February. Although I realize that some web fares are often slightly lower than our CRS fares, this example is typical of some of the major discrepancies I find. The fare difference is $572.50! Many passengers do not have access to the internet, or do want to book through the internet, and prefer to use the services of a travel agent. I cannot provide the services my clients have been accustomed to if I cannot access all the fares an airline offers.

By:  First Class Travel, Theresa Fallon


Computer Reservation System Regulations

OST-02-11577 March 8, 2002 Comments of Preferred Westwind Travel Extension of Computer Reservation System Rules

By:  Preferred Westwind Travel, Brenda Thomas

OST-02-11577 March 8, 2002 Comments of B & G Travel Extension of Computer Reservation System Rules

By:  B & G Travel, Linda Berry


Computer Reservation System Regulations

OST-02-11577 March 18, 2002 Comments of the Air Carrier Association of America

Microsoft Word File

Extension of Computer Reservations Systems (CRS) Regulations

ACAA requests that the Department "act more quickly" and immediately suspend 14 CFR § 255.10(a). As a possible alternative to elimination of the rule, ACAA would not object if the rule were amended so that a carrier would be allowed to buy the data of another carrier through a CRS system provided that the other carrier specifically agrees to the sale of its data. If a carrier objects to the sale of its data, it could not be sold by any system under Section 255.10(a). Therefore, as an alternative to suspension or elimination of this section, Section 255.10(a) could be amended as follows: § 255.10 Marketing and booking information. (a) Each system shall make available to all U.S. participating carriers on nondiscriminatory terms all marketing, booking, and sales data relating to carriers that it elects to generate from its system subject to the following conditions: 1) The data made available shall be as complete and accurate as the data provided a system owner; and 2) The system shall not provide to any participating carrier data on another carrier unless that other carrier has provided written authorization for the system to release the data.

Counsel:  ACA, Edward Fabermaan, 202.639.7502

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March 18, 2002 Comments of Amadeus Global Travel Distribution Extension of Computer Reservations Systems (CRS) Regulations

Amadeus supports the proposed extension, which will give the Department additional time to reexarmne the current rules and to consider changes to those rules. Amadeus urges the Department to act quickly to issue long-delayed proposed revisions to the rules. Further, Amadeus supports the Department's tentative finding that the current rules should remain in effect because they are necessary to promote airline competition and to ensure that consumers and travel agents obtain complete and accurate information on airline services.

While Amadeus supports the proposed extension of the current rules, it wishes once again to draw the Department's attention to a practice that has such pernicious effects that it warrants action by the Department sooner rather than later. This practice is the tying by system owners/marketers of access to discount fares or other economic benefits to the use of a CRS affiliated with, or marketed by, the airline offering the discount fares or benefits.

Counsel:  Steptoes Johnson, David Coburn, 202.429.8063

OST-02-11577 March 18, 2002 Comments of American West Extension of Computer Reservations Systems (CRS) Regulations

The Department stated in the NPRM that it will address promptly issues that require expedited action and notes America West's request for action on booking fees. In this connection, America West renews its request that the Department not wait until the overall re­examination is complete before acting on its specific proposal to control the escalation in booking fees charged by CRS vendors. Rather, the Department should expeditiously issue an NPRM addressing the structure and level of booking fees as proposed by America West. Under this proposal the CRS vendors would be restrained in their ability to raise booking fee charges above reasonable cost related levels without a cost justification.

Counsel:  Baker Hostetler, Joanne Young, 202.861.1532

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March 18, 2002 Comments of Delta Air Lines

Microsoft Word File
Extension of Computer Reservations Systems (CRS) Regulations

It is understandable that the Department has hesitated to modify the existing CRS regulations as it evaluates the dramatic effect of the Internet on the distribution of airline information to consumers. However, we are concerned with the statement in the Notice that suggests the Department has tentatively determined that "the current rules should be maintained because they appear to be necessary for promoting airline competition and helping to ensure that consumers and their travel agents can obtain complete and accurate information on airline services."

Counsel:  Shaw Pittman, Robert Cohn, 202.663.8060, robert.cohn@shawpittman.com 

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March 18, 2002 Comments of Northwest Air Lines

Microsoft Word File
Extension of Computer Reservations Systems (CRS) Regulations

Northwest understands that many of the issues pending before the Department are complex, and require careful analysis. However, Northwest is concerned that the annual extension of Part 255 has become an easy escape from facing up to the fact that the CRS rules now do more anti-competitive harm than they do pro-competitive good. Northwest urges the Department to bring the pending CRS rulemaking to a conclusion in short order; to sunset the CRS rules if possible; and if not to modify Part 255 so as to fulfill the rules' original purpose of limiting CRS market power, and to take into account the significant continuing changes in the distribution of air transportation.

Counsel:  Northwest, Megan Rae Rosia, 202.842.3193, megan.rosia@nwa.com 

OST-02-11577 March 18, 2002 Comments of RADIUS - The Global Travel Company

Microsoft Word File

Extension of Computer Reservations Systems (CRS) Regulations

RADIUS asks the Department to not only extend the current CRS Regulations but extend them to encompass equal access to all Internet fares, inventory and rules; to regulate the use of Electronic Marketing Systems; and, to protect the privacy of consumers’ data by prohibiting the sale or exchange of any PNR data under section 255.10 cal.

Consumers depend upon the Department to prohibit the creation of an environment, which would prejudice airline competition. The Department has a fundamental responsibility to protect consumers from being subject to airline deceptive practices.  There are literally millions of Americans that cannot access the Internet.  It is the Department’s responsibility to make sure that those consumers have equal access to those airfares, seats and rules.  Now is the time for the Department of Transportation to provide the nation’s travelers with the resources and protection they need as they travel throughout this great country.

Counsel:  Michelle Faust

OST-02-11577 March 18, 2002 Comments of Worldspan Extension of Computer Reservations Systems (CRS) Regulations

It has now been four and a half years since the Department began to reexamine Part 255, and it is time for a new approach. As the Department has acknowledged, the electronic distribution of air transportation is dynamic and constantly changing. With each passing month (and year) the CRS regulations become increasingly ill-suited and irrelevant to the environment they purport to regulate. As a result, the regulations now foster many more inequities, inconsistencies and anomalies than the problems they were originally designed to resolve.

Counsel:  Zuckert Scoutt, Charles Simpson, 202.298.8660

OST-02-11577 March 18, 2002 Comments of United Air Lines Extension of Computer Reservations Systems (CRS) Regulations
    Service List  

The adoption of the CRS rules essentially represented a trade-off or calculation that, notwithstanding the generally-applicable policy of air transport deregulation, government should intervene to restrict the market for CRS services in order to prevent airlines that own or control CRS systems from unfairly or deceptively distorting competition to the detriment of consumers. The complete elimination of airline ownership at two of the four CRS systems, however, has gutted the Department's jurisdiction over the CRS systems as a matter of law and, as a practical matter, rendered the rules counter-productive, particularly in the context of a marketplace where, notwithstanding the restrictions on competition imposed by the CRS rules, there is increasingly vigorous competition among distribution channels. In this new competitive environment, the CRS rules have become an outmoded, intrusive regulatory framework that shackles market forces in the name of preventing a potential harm that, regardless of whether it ever existed in practice, no longer constitutes even a credible theory.

Counsel:  Wilmer Cutler, Jeffery Manley, 202.663.8060, jmanley@wilmer.com 


Computer Reservation System Regulations

OST-02-11577 March 18, 2002 Comments and Request for Emergency Action by the American Society of Travel Agents Extension of Computer Reservations Systems (CRS) Regulations
    Exhibit A:  Delta Eliminates "Bases" Commissions for Travel Agents  

The American Society of Travel Agents, Inc. hereby responds to the captioned notice of proposed rulemaking in support of the annual extension of the rules and also requests emergency action by the Department to (1) ban, effective immediately, the enforcement of productivity pricing schedules that penalize travel agencies for booking segments on the Internet, and (2) ban, effective immediately, the sale of Management Data Information Tapes and other media containing travel transaction information generated by travel agencies except for information covering transactions on the lines of the purchasing airline.

Counsel:  ASTA, Paul Ruden


Computer Reservation System Regulations

OST-02-11577 March 19, 2002 Comments of the National Business Travel Association Extension of Computer Reservations Systems (CRS) Regulations

In the wake of Delta's announcement to eliminate commissions, NBTA urges the DOT to investigate the anti-competitive impact of airlines having access to extensive marketing information available from GDSs. As the American Society of Travel Agents (ASTA) noted, "the Delta action increases that risk exponentially." Air carriers, unlike firms in other industries, have access not only to their own sales data but also to data of their airline competitors. Further, they have access to the sales by their corporate clients and each of their distributors (travel agents and online agencies) for not only their airline, but also sales for those of their competitors as well. This data, which can be purchased by the airlines, provide carriers with the means to develop detailed information concerning all GDS-facilitated ticket sales and ticket prices.

NBTA would urge the DOT to immediately suspend Section 255.10, "Marketing and Booking Information"; because it clearly violates data ownership and privacy concerns and further damages the competitive balance of the U.S. aviation system. More importantly, NBTA would urge the DOT to give consumers, corporations, and travel agencies full access to all fares.

By:  National Business Travel Association, Marianne McInerney, 703.684.0836


Extension of Computer Reservations Systems (CRS) Regulations

OST-02-11577 March 20, 2002
Docketed March 21, 2002
Comments of Corporate Travel Manager Extension of Computer Reservations Systems (CRS) Regulations

By:  Corporate Travel Manager


Extension of Computer Reservations Systems (CRS) Regulations

OST-02-11577 March 25, 2002
Docketed March 27, 2002
Final Rule

Federal Register Copy for March 28th

Extension of Computer Reservations Systems (CRS) Regulations

We are changing the rules' sunset date to March 31, 2003, as we proposed. Although we have not determined whether we should readopt the rules at the end of our reexamination of them, our past findings on the need for the rules and evidence submitted in Docket 2881, the docket for the reexamination of the rules, indicate that allowing the rules to expire now could create a significant risk that the systems and their airline owners would engage in unfair methods of competition and that the systems would engage in unfair and deceptive practices by biasing their displays of airline services, as explained below. That possible risk justifies another short-term extension of the rules while we finish our reexamination of the need for the rules and their effectiveness.

The comments submitted on our proposed extension of the rules underscore the need to complete our review of the rules promptly and determine on the basis of the extensive record in the proceeding whether the rules should be readopted (with or without changes) or allowed to expire. Our staff is moving forward expeditiously to bring the rulemaking to completion. In our reexamination we are doing what Delta requests - we are "carefully examin[ing] each section and subpart of the current rules one-by-one to determine if it is essential to protect airline competition in today's marketplace."

Among the issues that we are addressing are those raised by commenters in this docket: whether we should keep, expand, or abolish the mandatory participation rule, whether we should regulate the Internet, whether airlines should make their E-fares saleable through the systems used by travel agents, whether the systems should be able to sell detailed marketing and booking data to airlines, and whether we should regulate booking fee levels. Although some of the commenters assert that individual rulemaking issues require action by us before we complete our overall reexamination of the rules, we think that we can most efficiently resolve the issues by addressing all of them in a single proceeding, which we are now doing. For the same reason we will consider there whether the rules should be temporarily suspended, as suggested by Worldspan and Delta. Since we did not propose a two-year suspension of the rules in our notice, we doubt that we could adopt their suggestion as our final decision in this docket. We will consider the parties' comments in this docket along with those filed in Docket 2881 in our review of the current rules.

By:  Read Van de Water


Computer Reservation System (CRS) Regulations

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March 29, 2002 Comments of Sabre Computer Reservation System (CRS) Regulations
         Exhibit:  Travel Services Industry Panel, 2/26/02, CIBC 11th Annual Gaming, Lodging and Leisure Conference    
    Exhibit:  Speech by Jeffrey Katz, Area Club of Washington Luncheon, 5/12/01  
    Exhibit:  Official Journal of The EC:  Case Comp/38.006 - Online Travel Portal Opodo, 11/11/01  
    Additional Exhibits Consist of Printouts of Orbitz and Travelocity Web Page Flight/Fare Searches - Over 400 Pages Long.  Will be Added This Week  

Most importantly and most urgently, DOT simply must confront in a substantive way, without awaiting the outcome of the more protracted rulemaking, the critical issue raised by a host of commenters, including Members of Congress, the Attorneys-Generals for twenty-three states, low-fare airlines, including Southwest, the National Business Travel Association (NBTA), a multitude of travel agents, and dozens of consumer groups. The issue that stands head and shoulders above the rest is the Department's response to the now well-advanced campaign by Orbitz, a joint venture owned and controlled by the five largest carriers in the United States, to seize control of, and dominate, the on-line distribution of airline tickets'. Of all the CRS issues before the Department, the need to impose regulatory safeguards on this airline consortium is the one matter that should be carved out of the overall proceeding and acted on without further delay.

The current threat to competition posed by Orbitz was well put by NBTA in its filing in this docket on February 24, 2002, where that association, which represents corporate travel managers for the Fortune 1000 companies, said: Currently, many of the web fares found on the airlines' sites and on websites like Orbitz are not found in the CRS, the traditional method of reservation acceptable for corporations and travel agents. Over the near and long term, as the independent, neutral distribution channels, such as the CRSs and online and off-line agencies are weakened, the largest carriers will gain ever more control over the window through which travelers are allowed to see their options.

As shown below, the Department should act now to ban the use by Orbitz of contract provisions that require carriers to provide "most-favored nations" treatment to Orbitz with respect to fares and other. The Department should also void the provisions of the Orbitz Agreement that give carriers financial incentives to confer fares and other content on Orbitz on an exclusive basis. In the lengthier rulemaking proceeding, the Department should revise the regulations so that the same duties that have long applied to parent carriers of traditional CRSs not to unjustly discriminate against competing systems in terms of participation and content also apply to parent carriers of multi-airline owned web sites selling air travel on more than one carrier directly to the public, like Orbitz.

Counsel:  Sabre and Pillsbury Winthrop, Kenneth Quinn, 202.775.9800


Extension of Computer Reservations Systems (CRS) Regulations

OST-02-11577 May 21, 2002 Comment of William Dross Extension of Computer Reservations Systems (CRS) Regulations

By:  William Dross


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