Commission urged to be cautious over online bookings

Travel-booking systems have changed significantly with the advent of the internet. Consumers can cast their net wide when searching for tickets by using online systems that collate offers from a number of airlines. But that could change if the European Commission opts for total deregulation of the sector.

The market in online systems, known as computer reservation systems (CRSs), is currently regulated by an EU code of conduct which obliges all airlines to distribute infor-mation fairly among the four major CRSs, Europe’s Amadeus, and US-based competitors Galileo, Sabre and Worldspan.

The Commission’s transport department proposed in December 2005 to scrap the code, but has since indicated a more open approach. A period of consultation will be launch-ed at the end of this month and concrete proposals could be published at the end of this year.

Amadeus is controlled by Iberia, Lufthansa and Air France which together hold a stake of nearly 50% and one of the main purposes of the code was to ensure that they would not withhold information from other CRSs. Rival airlines and CRSs have teamed up to urge the Commission to maintain some regulatory control over the sector. Scrapping the code of conduct outright, they say, would harm competition.

"Airline ownership does significantly impact the competitive circumstances under which [booking systems] operate," says Peter Sijbers, corporate travel manager at Philips General Purchasing, a branch of electronics giant Philips.

"If airlines cannot be forced to divest [themselves of] their interests, regulation will be needed to neutralise ‘airline ownership’ and its implications."

Amadeus’ competitors warn that liberalisation will not benefit consumers as the market will end up solely in the hands of Amadeus. Without certain checks and balances in place in a revised code of conduct, all other European airlines would be at the mercy of our biggest competitors," says an industry source working for a major airline.

Deregulation would be perfectly acceptable, say critics, if Iberia, Lufthansa and Air France were to sell their stake in Amadeus.

But Edward Ross at Amedeus says that it is inappropiate for the EU travel market to remain the only place that is regulated. "Scenarios of ring-fencing are unrealistic. Amadeus is a global market and one has to look at the situation in a global way," he says.

Travel-booking systems have changed significantly with the advent of the internet. Consumers can cast their net wide when searching for tickets by using online systems that collate offers from a number of airlines. But that could change if the European Commission opts for total deregulation of the sector.