Flight-booking overhaul under fire

Travel and consumer organisations are warning that a forthcoming overhaul of rules governing the neutrality of online travel booking systems will allow airlines to manipulate the market to their advantage.

The current code, dating from 1989, obliges airlines to distribute information fairly among the four major computer reservation systems (CRSs): Europe’s Amadeus, and US-based competitors Galileo, Sabre and Worldspan. It was designed to ensure fair play among airlines that have a stake in the CRS market.

Iberia, Lufthansa and Air France hold a stake of nearly 50% in Amadeus, Europe’s dominant CRS. Travel and consumer organisations say that the provisions of the current code are still needed to prevent market abuses by Amadeus’s owners.

Jacques Barrot, the European commissioner for transport, is expected to publish a revision of the code of conduct next month (13 November) but critics fear it will amount to complete deregulation. They say that it will be rendered null and void by new criteria determining its scope.

Application of the current code is triggered by ownership and control thresholds bundled in the legal definition of ‘parent carrier’. The current draft proposals, however, omit in a key clause references to ownership, focusing solely on control.

David Schwarte, vice-president and general counsel of Sabre, one of Amadeus’s main rivals, said: "We would be very concerned about any language in the proposal that undercuts the clarity of the current rule, which defines the parent carrier as one that owns or controls the computer reservation system."

Travel and consumer organisations claim that, in the absence of legal definitions pinning down ‘parent carriers’, the new code will effectively give Amadeus’s owners free rein to ring-fence the market.

A coalition of pressure groups wrote to Barrot last month (14 September), warning that any changes in the definition of ‘parent carriers’ would "strip the code of basic consumer protections".

Draft proposals maintain that safeguards against "potential competition abuses, especially in the case of vertical integration between CRSs and transport service providers" will be kept.

A Brussels-based lawyer said that Iberia, Lufthansa and Air France had, in any case, not been subject to ‘parent carrier’ provisions in the current code of conduct since 2005 as they had sold part of their stakes to UK private equity groups BC partners and Cinven. The groups, which together hold 52% of Amadeus, now take all major decisions at Amadeus.

Furthermore, he said, the rules were not needed any more because many airlines now had their own systems for ticket distribution. "Some of them have created alternative systems to CRSs. Ryanair, for example, doesn’t use any CRS," he said. "The airlines are not any more in a position where CRSs are essential. When airlines negotiate with CRSs, they are in a much stronger position than they were ten years ago."

A spokeswoman for Amadeus said: "We are in favour of a fully deregulated environment as exists on the other side of the Atlantic. We think the European Commission has in place all necessary legal measures to control the industry in case of deregulation. We trust the Commission will take the right decision."

Travel and consumer organisations are warning that a forthcoming overhaul of rules governing the neutrality of online travel booking systems will allow airlines to manipulate the market to their advantage.

• Primary Source