04 May 2011

ASTA, BTC Still Trying To Slip In Back Door Regulations to Protect Legacy GDSs and the Hidden Consumer Tax.

So despite being told point blank by the DoT that they do not want to regulate Ancillary Services by the GDS, ASTA and BTC persist in their efforts to regulate by the back door. Here is the letter they have sent out to the Travel Community entitled “Dear Managed Travel Professional”

Over the next couple of weeks there will be U.S. House and Senate meetings to reconcile competing FAA reauthorization bills. The American Society of Travel Agents and Business Travel Coalition have been working to have included in the final bill language that directs the U.S. DOT within 180 days to require airlines to disclose ancillary fee information (e.g., checked baggage charges) in the same electronic and transactable formats used to publish airfares themselves.
If you can lend your name to the letter below, please provide your approval at http://svy.mk/hCpwaM by the close of business on Friday, May 6.
We thank you in advance for your support in this matter.
Kind regards,
Paul Ruden, Esq., Senior Vice President Legal & Industry Affairs, American Society of Travel Agents, Inc.
Kevin Mitchell, Chairman, Business Travel Coalition
End Quote.

However lets consider the other things we know for sure. As BTC’s Chairman put out earlier, on April 21st they said “DOT has the unique ability to address this through rulemaking, and we are continuing to encourage that action.”

The day earlier on April 20th” in applauding the DoT new regulations on consumer protection the same author stated:

“According to BTC, the marketplace and state consumer protection laws cannot resolve this problem. As such, DOT is the last bastion of consumer protection and has existing authority to require full disclosure of fee data, as it has historically done by requiring that airline code sharing and change of gauge information be shared through the global distribution systems and on to TMCs and consumers. “
Yet despite having the formal amendment defeated in Congress. (Not content with a voice vote – Congress was forced into a tallied vote and the amendment STILL lost by a margin of 2:1)
The DoT was completely clear in its ruling. It stated:

“Full Disclosure of Additional Fees. Airlines will also have to prominently disclose all potential fees on their websites, including but not limited to fees for baggage, meals, canceling or changing reservations, or advanced or upgraded seating. In addition, airlines and ticket agents will be required to refer passengers both before and after purchase to up-to-date baggage fee information, and to include all government taxes and fees in every advertised price. Previously, government taxes and fees were not required to be included in the up-front fare quotation.
In addition, the rule announces that the Department will issue a supplemental notice of proposed rulemaking later this year that would require, among other things, that ancillary fees be displayed at all points of sale. “
Therefore any attempt to circumvent the due process of the DoT should be resisted at all costs.
So from hopefully a sane and rational position. Contact your Legislative representative and tell them NO BACK DOOR REGULATION ON TRAVEL DISTRIBUTION.

The DoT is right to have ruled that there should be disclosure of full information of airline fees and charges. Making that work is the responsibility of the respective parties. Forcing the airlines to disclose it exclusively via the GDS is a very bad precedent.

Ultimately what is so incongruous about this whole effort is that the GDSs are bankrolling a lobbying campaign to protect their broken business model and expensive hidden tax on the public. Last year that “tax” by Travelport alone exceeded $1.6 billion. (the amount that Travelport reported in Cost of Goods which consisted of cash funneled to its larger subscribers in kickbacks). As Travelport is the smallest of the 3 mega legacy GDSs that sum will be significantly increased when considering the other two.

While loudly denouncing the airlines as trying to change the model, these efforts are being bankrolled by the GDSs through Open Allies and other forms to force GDS as the exclusive non-Direct channel for Ancillary Services. Yet to make it even more – in my view comical – these same GDSs are quietly going behind the backs of the Travel Agencies and signing up Corporations directly to the GDSs. On terms more favourable than conventional agents get that tie the Corporation directly to the GDS. Thus disintermediating the Travel Agency.

Perhaps Mr Rudin and his fellow team at ASTA should be answering the charge of preventing the GDSs from undermining their members livelihoods rather than trying to ingratiate themselves with the GDSs. Mr Mitchell on the other hand makes it very clear where his loyalty lies.

I make no bones about the fact that I want to see a change in the overall compensation model for distribution. Let's try and bring in a rational approach to the issue.