DOT 102-02
Tuesday, November 12, 2002
Contact: Bill Mosley
Tel.: (202) 366-5571
DOT
Proposes Revised Computer Reservation System Rules
The U.S. Department of Transportation (DOT) today proposed revisions to
the regulations governing the computer reservation system (CRS) industry that
would address changes in airline distribution and ownership since the department
last revised the rules in 1992.
DOT recognizes that ongoing developments in the airline distribution
business may have eliminated the need for at least some of the rules.
DOT is therefore requesting comments on whether it may be able to
eliminate rules in ways that could promote competition in the CRS business and
give airlines more flexibility in negotiating with the systems.
The department has additionally concluded that rules regulating the sale
of airline services over the Internet appear unnecessary at this time.
CRS systems provide information on airline schedules, fares
and seat availability to travel agencies and allow agents to book seats and
issue tickets. Currently, there are
four CRSs operating in the United States: Sabre,
Galileo, Worldspan and Amadeus. Almost
all travel agents have relied on CRSs, and because few agents have used more
than one system, carriers have had to participate in each system to assure that
all agents have access to their flight information.
This dependence of both airlines and travel agents on CRSs caused the
department in its last review of the CRS rules to conclude that the rules were
necessary to prevent harm to airline competition.
The airlines’ growing use of the Internet for selling tickets has
weakened their dependence on the systems and possibly the need for at least some
of the existing rules.
DOT rules adopted in 1992 required that information offered
through CRSs be objective and unbiased and that participation in each CRS be
open to all carriers on a nondiscriminatory basis. DOT also made it easier for airlines and travel agencies to
bypass CRS systems by using other electronic means for transmitting information
and booking requests. The
department also required that information and booking functions provided for
each airline be as reliable and current as they were for the owner airline, a
provision known as “equal functionality.”
There have been two major developments since the 1992
rulemaking. First, the airlines
have been divesting their CRS ownership interests, and two of the systems –
Sabre and Galileo – are no longer controlled by any airlines, although each
system’s former owner continues to market the system.
Secondly, the Internet is becoming an increasingly important distribution
channel for airline tickets. In
addition to the airlines’ own websites, a number of travel agencies operate
Internet booking sites. Internet
travel agencies, however, also depend on CRSs.
Today’s
notice of proposed rulemaking (NPRM) would, if made final, eliminate several
provisions of the existing rules. One
of these is the requirement that each airline with an ownership interest in a
CRS participate in competing systems at the same level at which it participates
in its own, if the terms are commercially reasonable.
Another is the rule prohibiting discriminatory booking fees.
The department has tentatively concluded that these two rules may unduly
limit the ability of airlines to bargain for better terms with the systems, and
that ending them could allow market forces to provide better terms for carriers
than they now have.
The
NPRM would maintain the existing requirement that information in the systems be
organized in an objective and unbiased manner.
There may be a risk that systems, whether or not owned by airlines, would
engage in display bias if not prohibited from doing so, the proposal said.
In addition, DOT proposes to continue the equal-functionality
requirement.
DOT
is not proposing to regulate the sale of airline tickets over the Internet,
similar to its past decision that the CRS rules should not cover
“brick-and-mortar” travel agencies. The
department will continue to address on a case-by-case basis any competition
concerns raised by Internet travel services, such as in its ongoing informal
investigation of Orbitz, the on-line agency created by the five largest
airlines.
The
NPRM also would clarify the department’s existing full-fare advertising
policy, which requires advertisements and travel agents to state the full fare
that must be paid by a traveler. The
notice requests comment on whether travel agencies may initially exclude service
fees from the total price, as long as consumers are given notice of the fee and
of the total price to be paid when informed of any specific itinerary that may
be purchased. The NPRM reaffirms
the department’s policy that all other fees and surcharges, except for certain
government charges, must be included in any fare amount, and that the department
can and will use its enforcement authority if on-line travel agencies engage in
deceptive practices.
DOT
observed that the growing use of the Internet and other changes in airline
marketing do not yet seem to have ended the systems’ power.
DOT, however, is also requesting comment on whether the rules could be
allowed to expire next year.
Today’s
NPRM follows two requests for comments from the department for comment on the
issues in the rulemaking and a review of the extensive comments that were filed,
as well as informal studies of related airline distribution issues.
Comments
on the proposed rules are due 60 days from its publication in the Federal
Register. Reply comments are
due 30 days later. Following the
comment period, the department will review the comments and prepare a final
rule. The proposed rule may be obtained via the Internet at www.dot.gov/affairs/briefing.htm.
Comments and other documents in the case may be obtained at http://dms.dot.gov,
docket number OST-97-2881.
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