24 August 2008

Amadeus Lobbying vs Consumer Protection - MEPs to decide this week

This week (or shortly depending on their demanding summer holiday schedule) the nice people who are supposed to represent the interests of the European Consumers - namely the Members of the European Parliament - will vote on the new CRS rules and code of conduct. Most of the rules are common sense. However one rule remains open to abuse. As a direct result of Amadeus Lobbying (and no doubt some nice amounts of contributory political expedient cash) The Commissioner (now an Italian) will rule on one contentious issue that of the definition of "Parent" carrier.

The issue is simple. Does Amadeus board of directors which includes voting representatives from the 3 former majority owners - Iberia, AirFrance/KLM, and Lufthansa constitute a totally open and transparent separation of interests with the Amadeus GDS. (The Commission and European Parliament persist in using the term CRS even though the rest of us correctly use GDS?

Each of these airlines is dominant not only in its own markets but exert significant influence over a very broad swath of the Travel Industry. Amadeus too is now without any shadow of doubt the dominant market force in distribution of airline and travel products throughout the European Community and the other members of the ECAC states.

If the MEPs follow the path they are on - they will free the Madrid based company from any and all restrictions. This is blatantly anti competitive and must be stopped.

The EU parliament's TRAN committee (the group who reviewed the proposal) agreed by an overwhelming majority to place restrictions by creating a new definition of airline parent type control. This was essentially if one or more airlines with board representation owned a chunk of GDS stock then they would be subject to the parent restriction which would ensure open competition between Aamdeus and those GDSs who did not have Airline ownership. Despite this vote the Commission pressed the so called "Independent Rapporteur" appointed to look into this situation to withdraw his original recommendation and table it for the future review - past when the MEPs would vote.

Comically this makes for typically hilarious political quango reading. Sadly this makes for a potential disastrous monopolistic situation in all ECAC markets.

Some might say that the issue is moot from two perspectives.
A) the market is in open turmoil anyway as witnessed by the Lufthansa vs Amadeus spat in Germany over the new fee structure to be imposed on Amadeus generated travel agency bookings
B) the real market has moved direct with the LCCs and the FNC airlines fighting it out directly.

In my view Amdeus is already too dominant. The level of dominance of Amadeus demands a totally fresh look at its businesses. Rather than giving it new freedoms - it should be split up into its component parts:

Airline Hosting and IT services
Distribution services
Non-Air Services including branded products such as Opodo.

The current interlocking relationships of Amadeus and its airline owners has been held in check for many years under the current ECAC code of conduct. To sweep that away now as the market consolidates both on the airline side and on the GDS side would be tantamount to a license to print even more money by Amadeus and its airline owners at the expense of the consumer. It is anti-competitive, It is anti-consumer and its not within the spirit of the EC laws.

Not sure that the MEPs will pay any attention. They know but frankly they don't seem to care.

Check out what BTC has to say about this.


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