Airline booking firms under fire

Date: 21/03/02

BYLINE = By Laurence Frost

THE EUROPEAN Commission is examining claims by airlines that 'anti-competitive behaviour' by automated booking firms is resulting in artificially high charges for passengers.

The move comes as the EU executive prepares to review the way air ticket sales by travel agents worldwide are channelled through just four computerised reservation systems (CRS).

Airlines will tell officials at a meeting today (21 March) that the four systems - Sabre, Amadeus, Galileo and Worldspan - enjoy 'substantial powers that are being abused', according to Sefik Yücksel of the Association of European Airlines (AEA).

'We're saying they are monopolies behaving jointly as oligopolies,' said Yücksel, who added that a lack of competition in CRS services meant airlines were forced to sign non-negotiable 'take-it-or-leave-it' contracts imposing sharp price increases.

The four CRS operators have increased their prices by an average of over 5 in each of the past five years, the AEA claims, while their main costs, computer hardware and telecoms, have fallen.

The airlines hope a review of the EU regulation on airline ticket sales by Loyola de Palacio, the transport commissioner, will bring increased competition between the booking systems and lower prices.

Transport officials are already looking into a complaint from an unnamed airline that the booking companies are breaking the current regulation by charging excessive prices.

German carrier Lufthansa and other airlines are also considering a formal complaint to competition chief Mario Monti, alleging that the companies are breaking EU rules banning price-fixing and the abuse of dominant market positions.

'There's something strange going on when all four players increase fees while informing agents that their costs have gone down,' said Yücksel.

The Commission is concerned that major airlines are obliged to use all four systems to maintain sales - effectively eliminating competition between them. 'Should an airline choose to leave even the smallest CRS [Worldspan] it would automatically disappear from 15 of travel agents world-wide,' said one EU official.

Monti's spokeswoman Amelia Torres said officials were taking a close interest in the review of the regulation 'because of the obvious competition issues involved'.

A spokesman for Sabre, the largest of the booking firms, said airlines had a choice whether to use the company. 'There are other ways to reach consumers,' he said.

Traditional airlines, struggling against low passenger numbers since 11 September, are keen to reduce ticket prices to close the gap with low-cost carriers, which use internet sales to bypass the booking firms and have been gaining market share.

The European Commission is examining claims by airlines that 'anti-competitive behaviour' by automated booking firms is resulting in artificially high charges for passengers.