Ryanair mounts further challenge to big airlines

Date: 23/07/1998

By Chris Johnstone

TENSION is growing over the use of computer reservations systems and incentives to travel agents as fresh complaints add to a growing backlog of cases centred on the way airline tickets are sold.

In the latest move, the European Commission has revealed it is assessing low-cost airline Ryanair's complaint that travel agents are shunning its flights because they are facing increased pressure to meet sales targets from powerful rival British Airways.

Although Ryanair markets its European flights direct, it is still reliant for 60&percent; of its sales on travel agency bookings.

BA, in a move imitated by other airlines, has told travel agents they must sell more in future to earn the same levels of sales commission.

Together with the big airlines' launch of their own low-cost subsidiaries, this is being seen by the small start-up carriers as a deliberate attempt to destroy them.

Fellow no-frills carrier Virgin has already fired off a similar complaint against BA. The Commission is expected to rule on the case, seen as crucial for smaller airlines' survival in the face of the marketing muscle of the majors, in September.

The Commission's delay in delivering a verdict on Texas-based computer reservations systems company Sabre's complaint against European airlines is souring transatlantic relations and undermining Competition Commissioner Karel van Miert's bid to forge greater world-wide cooperation between competition authorities.

Sabre's complaint that its services to travel agents were affected by the refusal of Lufthansa, Air France and Iberia to give it timely updates of their latest cheap fares was ceded by US authorities to their Commission counterparts for fast treatment as part of a cooperation agreement.

More than 18 months later, US diplomats are asking what has happened and whether a more ambitious competition agreement between the EU and US is worth the paper it is printed on.

European airlines are meanwhile opposing a new code for reservations systems agreed by EU transport ministers last month.

They claim a bill for millions of ecu and a technology headache of 'millennium bug' proportions are in the pipeline because of proposed European rules to help their main rivals, the railways, to show their services on travel agents' computer screens.

Airlines, which own the computerised booking systems used by travel agents, argue that they will have to pay for new information technology required to get rail on board.

“This will cost us millions,” said Sefik Yuksel, of the Association of European Airlines (AEA). “We are the 90&percent; users of these services and will have to pay most of the higher costs. Airlines have been dreading this scenario for years,” he added.

The demand for rail information to be provided on screens will lead to a massive bill for inputting the data.

The European Parliament must give its verdict before the regulation can become law.