BTC Agitates for Re-Regulation. Let's Keep Big Government Out

BTC a pressure group based in Radnor PA and is self appointed chairman is launching a new effort to bring big government back to Travel and re-regulate the industry. I firmly believe this is a bad move for the market. They are starting an appeal to get 25,000 signatures before the end of December.

Why is this bad and why will it fail?

I dislike the idea of fees - indeed I personally detest them. However I recognize the right of any company, service provider intermediary and individual to charge them for their products and services as they see fit.

What BTC is failing to recognize is a number of things.

1. It is the fundamental right of a company to charge for its services as it sees fit
2. This would have a detrimental effect on the Travel Industry to enforce compliance and raise costs accordingly. 
3. It would apply not just to airlines but also to Travel Agencies (online and offline) who will be forced to disclose all fees and services. This would really hurt smaller companies and allow more market concentration. 
4. The DoT already evaluated and dismissed further regulation on this topic. There is enough legislation extant.
5. It is probably discriminatory to pick on a specific market. 

Presumably this effort is being funded by those who stand to benefit from additional work load. I do not know who these parties would be - but it would seem that the ultimate losers are going to be  the administration impact particularly on corporations and consumers - the very people who this push is purporting to help.

it should be remembered that the airlines need to make money. That is capitalism. The heavy hand of government has not had a good track record in air transportation services in providing benefit to the consumer. The airlines have been allowed to merge and create mega companies who can essentially do what they like. This policy of the DoT to allow mass concentration within the market where 5 companies control 90+% of the air transport market enables oligopoly behaviour such as this. That is water under the bridge and cannot be undone. Thus I believe any argument is moot that the Feds should get involved specifically over and above existing legislation/regulation.

I am a believer in States Rights - from a democracy point of view rather than an efficiency point of view. The question has to be asked as to whether this is a Federal issue or a States issue. (I refer the reader to the various seller in travel laws that have jurisdiction in this area already).

In an unsolicited email from BTC - the following statement is made. On this basis I am using the information provided to encourage the industry to fight against Re-regulation. Here is an exert and the highlight is mine:

"The WE the PEOPLE campaign model is a uniquely decentralized one in that any organization is free, indeed is encouraged, to copy all of the website's comprehensive information and tools to its own website or intranet for use with various constituencies. The website - http://www.businesstravelcoalition.com/whitehouse.html - contains the following components: petition text with a link to the WhiteHouse.gov signature page, social media tools to spread the word, a Media Center, a FAQ page and complete toolkits for TMCs, corporate travel managers and other industry participants that contain all needed communications templates to encourage colleagues, families and friends to get involved in this campaign."

Ultimately it is up to the market to decide. Let the electorate vote with their feet and their wallets.  The government should NOT be involved in this form of regulation. Do not sign. Do not promote this. DO let your voice be heard.

BTC and ASTA Fire Salvo at IATA

Probably not the wisest move on their part but ASTA and BTC have fired a broadside against IATA's NDC "New Distribution Capability".

For your edification I reprint here their entire statement, feel free to comment:

ASTA AND BTC CHALLENGE IATA CLAIM OF TRANSPARENCY REGARDING NEW DISTRIBUTION CAPABILITY
Alexandria, Va., October 17, 2012— The American Society of Travel Agents (ASTA) and Business Travel Coalition (BTC) today sharply disputed claims by Tony Tyler, CEO of the International Air Transport Association (IATA) that the development of the “New Distribution Capability” (NDC) was being conducted in open and transparent collaboration with all segments of the travel industry that would be affected by it. Nothing could be further from the truth.
“ASTA sees nothing in the IATA process to create NDC that resembles full and open transparent collaboration with the travel agency community,” said Nina Meyer, CEO of ASTA.  “ASTA had asked to participate as an observer, with the possibility of posing questions, to the IATA Working Group on NDC in Montreal in late November.  IATA’s response was initially positive, citing a desire to collaborate. ASTA then invited IATA to come to its TRADESHOW in Los Angeles in September to meet with travel agencies and the Business Travel Coalition and respond to questions.  When ASTA later asked for details of its Montreal participation, it was told that neither it nor any other agency associations would have access to the development process for NDC. IATA did express a willingness to meet separate with ASTA, but that is far from the full collaboration and openness that IATA is trumpeting,” Meyer added.
BTC Chairman Kevin Mitchell said, “While we are still conducting due diligence with regard to understanding all the facts and implications flowing from IATA's new distribution initiative, it's reasonable to preliminarily conclude from discussions with and presentations from IATA that there is reason for significant concern over negative impacts to consumers, competition and costs. A disturbing warning sign - that all is not right - is that IATA pointedly talks about an open and collaborative industry process, yet refuses to let organizations that represent travel agents and corporate travel departments have a seat at the table. IATA only welcomes individual travel agents or travel managers who are largely prevented from speaking up for fear of retaliation on their businesses or airline contracts. BTC is among several industry organizations in the U.S. and abroad that requested to be part of the process only to be told no by IATA.”
Nina Meyer added, “The need for complete transparency regarding NDC is illustrated by some of the false premises for NDC that Mr. Tyler stated in his speech before the IATA World Passenger Symposium being held in Abu Dhabi this week.  Mr. Tyler stated that because the majority of air travel is sold by travel agencies relying on Global Distribution System (GDS) technology, “the travel offer is put together outside the airline by third parties… it is impossible for the airline to tailor its offer to the customer via the indirect channel…. this model is focused only on finding the lowest ticket price. This has resulted in the commoditization of air travel…. the travel agent only sees codes – F, J, Y…. There is no way to tell if your “J” product is a flat bed or an economy class seat with an empty seat beside it.”
These remarks essentially blame travel agents for airlines’ commoditization of their product. But it is airlines that have set prices since deregulation and entered into commoditized code share agreements, not travel agents. Agents sell what the airlines offer.  And ASTA rejects categorically the notion that travel agents do not understand what they are selling and are unable to communicate product characteristics to their clients.  If that were true, agents would have disappeared long ago, but instead in the United States alone they sold $68 billion in air transportation in 2011.
Moreover, Mr. Tyler’s remarks cite as current airline innovations such items as “special meals, expedited boarding, roomier seats and access to airport lounges.”  Most of these “innovations” have been around for years. If these products are made available to agents in a transparent and transactable manner, which is entirely possible through GDS technology and the ATPCO OC process, travel agents will sell more of them to consumers to the benefit of consumers and airlines alike. ASTA has seen demonstrations of GDS technology that has these capabilities and more.  Rote repetition of the claim that the GDSs can’t do this does not make the claim any truer.”
About ASTA
The mission of the American Society of Travel Agents (ASTA) is to facilitate the business of selling travel through effective representation, shared knowledge and the enhancement of professionalism. ASTA seeks a retail travel marketplace that is profitable and growing and a rewarding field in which to work, invest and do business.
About BTC
Founded in 1994, the mission of Business Travel Coalition is to interpret industry and government policies and practices and provide a platform so that the managed travel community can influence issues of strategic importance to their organizations.
###

1 Blind Mouse

Hickdory Dickory Dock, the mouse ran up the clock. The clock struck one and the rest of the industry died in a nuclear holocaust.

OK so its a parody but it hides a very serious message.

I read today the latest missive from the kitchen table in Radnor PA. BTC released yet another of its fine episodes in "as the world turns"

QUOTE:

"For two and one-half years, despite major corporations’ substantial collective purchasing power and their continuing calls for full disclosure of fee data, airlines have refused to provide the travel agency sales channel with this vital information. This refusal is well-defined evidence of a marketplace that is not functioning properly." END QUOTE.

Well this is not the case.

Each airline is obliged by law to explain its pricing and provide that information to the public. It so does - or risks the wrath of every consumer protection and government regulatory body under the sun.

And let me be clear - there have been transgressions in the past.

But in the main the US airlines are good at this. They provide the information to the consumers and to the agency community.

A long time ago - the airlines got tired of using the rather poor legacy GDS vehicles for disclosure of information. Instead they turned to the preferred form of communication that the vast majority of both consumers and travel agents use today - namely the Internet.

C'mon guys. No one owes anyone a living. Comparative shopping COULD have been easily provided in an innovative form by these GDS players but they chose not to. Consequently this is why Google stepped into the game and bought ITA for $700 million. If the GDSs had done their job well and in a time when there was good cooperation with the airlines - then companies like ITA and Everbread etc would not have been able to come into being. So let us not shed a tear for companies who today make between 27% (Travelport 2010 Q4 numbers) to more than 46% profit on their GDS operations. (Amadeus 2010 annual report).

And this continual obfuscation over the real issues is just INSANE.

Everyone should as a matter of course READ the complaint in full. Then make up your mind. There is a lot of information that should give food for thought to a lot of people. Surprisingly I found it very informative as an eye opener onto the issues.

DO NOT DISMISS THE CONTENT & DETAIL. It has relevance for everyone concerned with this debate.

DO NOT JUDGE until you have read the document and the expected responses from Travelport. I hope that the complaint comes to trial early but alas I fear that American justice moves at a slow pace. About the only thing I agree with the Press Release is the following statement:

"Expensive and years-long court proceedings"


Cheers

BTC's Call to Action For... Additional Government Expenditure and Taxpayer Burden ... But For Why?

When pressure groups call for additional Government oversight - it is usually to right a wrong and prevent a hurt inflicted on a group or individual.

So you have to ask why is BTC asking for additional US Federal Government intervention into what is already one of the most heavily regulated industries in the world. So what are they asking for?

Here is the relevant section from a recent press release from BTC:

However, current legislation will not require the airlines to share the information with TMCs. If amended properly, however, the law would make price information about these services clear and easy to find and purchase through TMCs servicing managed travel accounts.

For all the rhetoric that has come from the Open Allies for Transparency in Airfares - this is the salient sentence that BTC wants you to petition your Congressman....

ASK EACH CONGRESSMAN TO:
Include language in the Conference Report instructing the U.S. Department of Transportation to adopt a rule, already being considered, under which all airlines will be obligated to disclose airfares and all ancillary fees to consumers and to TMCs through which they choose to sell airline tickets.


So I ask you to examine this request and consider it VERY carefully.

There are two contradictory words in this statement.

They are OBLIGED and CHOOSE. That to me just doesn't make sense.

Further - why are we (oh yes the Professor is a law abiding and tax paying individual in the USA) - the US public being asked to pay for the additional big government at the very time when the US Government like many around the world are trying to pay off such huge debts.

Especially when you consider that there is already a vast amount of existing legislation that ensures that all pricing is indeed transparent.

So who actually benefits from this legislation? Actually it benefits 3 companies of which 2 are based in the USA - the third in Spain. These 2 US companies are owned by Private Equity firms. All three of which operate in a monopoly manner controlling volumes of business larger than any airline on the planet.

The proposed legislation is unnecessary, expensive and anti-competitive. It will set a dangerous precedent for any commercial enterprise in the USA who will be forced along with their intermediaries to disclose all pricing options.

This will add huge overhead to all and cause a nightmare of compliance. Can you imagine a travel agent who has to read to his customer the full pricing and fee information for every option he provides to his customer?

As I have said before - be careful what you wish for.

Now before another round of pork gets added to the VERY necessary legislation that this country needs - which is a next gen Air Traffic Control System - make sure you tell your legislative representative that you don't want him wasting our money.

Thanks for reading.

Lies, Damn Lies and then there are Fees...

I think we all know what it is like to be lied to. Politicians lie. Pressure groups lie. Advertisements lie.

So it is somewhat bad that respectable organizations such as ASTA align themselves with other organisms that are not telling the truth.

So here is the headline from BTC:


MORE THAN 50,000 TRAVELERS TELL THE U.S. DEPARTMENT OF TRANSPORTATION THEY ARE “MAD AS HELL!” ABOUT HIDDEN AIRLINE FEES

Consumer and Travel Groups Deliver Petition Signatures to DOT on “Mad As Hell Day!” in Support of Secretary LaHood’s Efforts to Require Airline Fee Transparency.

Er... excuse me that is actually a lie.

As I noted yesterday the issue of airline fees is but a small part of a far broader rule making input that the DoT is requesting. Further transparency of airline fees is no better - but definitely no worse than the issue of say special fee conditions that a travel agency has to live with.

While I don't personally like fees - they are here to stay. I am one of the 50,000 people who signed the petition but I was very clear that I was signing the petition for a reason to state that I supported the right of the airlines to charge the fees.

Further I also made it clear in both my submission to BTC and the coalition as well as the DoT itself that the mechanism of making the airline fees "transparent" as advocated by the Coalition was itself highly misguided. IE that making the fees transparent via the GDS channel would create a burden on everyone that was unnecessary. IE the airlines would have to do extra work and the agencies would have to do extra work and the consumer would not be any better off.

Forcing such a process would make every airline rule and regulation required in each GDS. Something that is a backward step - 15 years ago before the internet became so important to our society - yes. Today no.

So I do hope that some people will stop with the misrepresentation and the lies. Also the coalition should stop hiding its intentions and be very clear that it is against fees. Wait... isn't that what it says? Mad as hell about airline fees...

Read the fine print my friends and then decide if you want the government deep in regulating the distribution of airline products. Heck why not re-regulate the industry and re-award mail contracts.

.... BASTA as the retiring DG of IATA says. Let's not waste the government's time for something that is already more than adequately in place.

I really do wish the coalition would stop rubbishing the hard work that agents on the line do. But then I guess the real little people don't matter when you are trying to get media attention.

Cheers

What Frustrates People About Air Travel?

BTC - the Business Travel Coalition and Flyers Rights conducted their hearings on Monday (September 21st) in Washington DC. The backdrop has been the concern about a true passenger bill of rights and the somewhat dramatic stories concerned with passengers being imprisoned on aircraft.

Opinion Research Corp recently conducted a survey of more than 1000 US adults on the subject of what irks them most in air travel. This showed that the issue is not isolated and has become the joint leading cause of Air Travel frustration.

It would seem that Congress which now has 2 bills (Senate and The House) should enact this legislation. Several reports on yesterday's hearings can be found online but here is just one from CNN.

An excellent editorial by Perry Flint of Air Transport World - aptly describes the situation as the last straw.

The US Congress has no excuse NOT to pass Passenger Rights legislation.

So let's get on with it.

BTC Releases Study On Pax Delay

The BTC has been a long campaigner in the issue of passenger rights. And so to put the money where the mouth is - they commissioned a study on the travel industry opinion on the thorny issue of passenger flight delays.

The just released study results should make for some compelling reading for the airlines and their users. Clearly there is an impression that the airlines have failed to heed issues of passenger rights. The industry reaction has been to obfuscate the issue rather than address it. Voluntary self governance rules have failed and even the current regulations are largely flaunted by US carriers.

Contrast this with the situation in Europe. The European Commission issued passenger rights legislation in 2004. Since that time the airlines have been forced to comply and provide automatic compensation.

I believe that the US airlines have had enough time to work this out. The recent cases of tarmac delays and "imprisonment" culminating in several flights last month of extended delays should be enough for the US Dept of Transportation to issue new regulations and/or Congress to act appropriately to curb the industry excesses.

Of course I should point out that the reasons for the situations are not always the direct fault of the airline. However too often a delay or an external factor is cited for the reason. The best one I heard a few weeks ago was "Operational Reasons". The EC rules are quite simple and compliance is now a standard and accepted convention. AS I have noted before - the best performing airlines are the LCCs with Ryanair toping the table. Yet still bad airlines on both sides of the Atlantic try to hide behind erroneous interpretation of situations.

People this is not hard. Either the US DoT should fix this problem as a consumer protection issue or they should hand over the question to a different agency.

Passenger rights legislation is long overdue in the USA. As a very frequent traveller - I can more than attest to this. While I cannot vouch for the BTC's efficacy of the study - I believe it to accurately reflect a need to address the problem and the conclusions should point to a new passenger bill of rights legislation.

I for one am wholeheartedly in favor of this

Cheers

Is The Rhetoric Against Lufthansa's PFP Too Loud?

I have tremendous respect for Kevin Mitchell and his advocacy of the Business (Corporations) user community.

However I have to wonder why the heat is being turned up against LH? To read more please go here:

http://businesstravelcoalition.com/campaigns/pfp_background.pdf

So why do I disagree with Kevin here? Frankly there is a sense of responsibility that has blame all the way round. LH's frustration with trying to get a resolution out of the GDSs has spilled over into the services model for the agencies. It is of course a classic squeeze play. I have listened intently to both the arguments from the GDSs and from the Airlines who are the real protagonists in this battle. However the agencies (TMCs in the main) and indirectly the corporations are drinking from the well of the Airlines cash which is being diverted by the GDSs for their express intent to retain their customers by using the cash to preserve their market share.

As a member of one of the teams that introduced the incentive model while I was at Worldspan, I can honestly say that the original intent has been somewhat perverted along the way. But frankly it doesn't matter how we got here - the fact is that we are here and the airlines whose cash it is - believe that they should be in control rather than the GDS.

Whether you agree or not, the end game here is that the incentive fees are likely to end or be substantially reduced. It is just an unsustainable model in a transparent distribution world economy.

Where I think there is a real issue is that the transition from a supplier paid model to a user paid model (which is currently under way) requires that the nice and easy holistic one size fits all model either delivers its promise (or its PR!) or the agents have to accept that they cannot rely on the GDSs for full aggregated content. As many regular readers know this has been a constant theme of mine. This is the moment I absolutely think the rhetoric has been misplaced.

I believe that my position is supported by the fact that the Agencies - particularly TMCs - rely ever increasingly on 3rd party automation to fix the inadequacies of the GDSs. Either in content provision (eg access to LCCs) Fare tools, Quality control tools or customer service management tools. The Corporations are happy to demand that level of quality service and even happier to pay for it - or so it would seem.

As the GDSs retreat from the full service model, they are attempting to simply preserve the status quo via a commercially unsustainable incentive program that robs Peter to pay Paul. Perhaps one should ask if that is fair?

Thus in reality if BTC is going to hold a mock trial then there should be a set of co-defendants in the dock. The Agencies and the GDSs are at least accessories to the crime if there is indeed one.

For now, if you follow the logic, LH should not stand alone in the dock - there should be another defendant added to the accused - Air France/KLM. But even then that is not all. You can easily add Gol, Norwegian and EasyJet.

While I think there was once a never never land where the GDSs provided all the tools and services that the agencies (Corporate and Leisure) needed, sadly that time has long passed. There is not going back. So like it or lump it the new world order makes the current model anachronistic at best. Unsustainable - that is for sure. LH is just doing what they think they can.

I just hope that the Airlines and the Corporations can get to an accommodation on this issue - that requires a good dialogue - for that Kevin is correct. But in case anyone is thinking that this will all get resolved with everyone making nice, I fear that they are going to be sadly mistaken. The underlying financial numbers in my humble opinion do not lie. There just isnt a way to make the numbers work for everyone. Whether it is in 2009, 2010 or 2011, the current model WILL undoubtedly change. On that you can depend - and that is no hot air. I simply do not believe the defendants have a case to answer.

Cheers

The BTC vs IATA Privacy Debate

The debate between BTC and IATA over the PAXIS information tool has boiled into a brawl. As it should.

The EU New code of conduct has many gray areas - but data privacy is not one of them. There are clear obligations for any provider of data. They must mask individual and corporate/group entity data so that performance of an individual side cannot be interpreted.

Frankly the Paxis product is somewhat clunky to use. As is all MIDT data. BIDT data cannot be used inappropriately, this is what seems to be the case.

IATA is going to have to back down or it will create a back door to data across the board. I hope they see the error of their ways. Perhaps when the boys and girls all move to Miami things will improve!

Cheers

BTC vs LH PFP. Interesting Dialogue

There was something very comforting about the days of the Bell System monopoly. You could always pick up the phone and you always got dial tone. Things had to be pretty bad before the comforting noise in your ear. Today we ask questions like "Where are you?" and we know that we have a 50:50 chance of no dial tone.

I use this analogy to illustrate how complicated things have become in distribution. Today, you cannot rely on the GDS any more to provide you with 100% of distribution needs. As I love to say (and this is no disrespect to mothers-to-be) we are all a little bit pregnant here! Connectivity to multiple sources of information (content if you prefer) in the form of Direct (LCCs and Legacy airlines) Travel types (Hotels vs Airlines) and products etc are a must for any intermediary.

While I applaud BTC's efforts to get the airlines to play ball in making the GDS channels work to ease distribution woes - I think its a losing battle.

LH has responded to the BTC appeal over its push to get Amadeus (in which it owns a 11.5% interest) to play ball. BTC feels justifiably - that the corporate travel managers are a pawn in the game. They are.

However in the longer run - Amadeus is the one who has to change and adapt. With approx 80% of the indirect distribution share across Europe - they need to deal with the issue and come to the table and make a deal. If not they must accept the consequences. So far there is no movement on their part. In the mean time users are scrambling to adapt. And adapt they will.

For the LH letter response and the dialogue - go to this link. Its worth a complete read.

http://businesstravelcoalition.com/campaigns/pfp_outreach.pdf

Cheers

Is the LH PFP a Threat?

The BTC has been sounding the alarm for Corporate Travel Managers and TMCs about the Lufthansa Preferred Fares Program (PFP). I encourage people to read up on this important development in travel distribution realignment.

The bottom line is that LH wants to finally create a ring fence around distribution costs. Their ultimate goal is to shift the cost burden from their side of Operating Expenses to the Distributors of their products. Fine in theory rather more complex in practice which is why this program is difficult to understand and complex to implement.

My personal sense is that this is just another battle in a longer war. LH is determined to reduce their cost structures and improve their bottom line through cost re-deployment. They are well within their rights to do so. But be careful what you wish for. It may just come to pass. If or rather when it does - then I believe the realignment may not necessarily be in favor of the airlines.

The more interesting battle is what is happening behind the scenes between Amadeus (in which LH has an 11.5% share) and the airline. The Travel Managers and the agencies - both corporate and leisure will become pawns in this battle. One can only imagine what Amadeus board meetings must be like with the 2 VCs very unhappy that LH is doing this. if LH is successful there will be no shortage of airlines queuing up to do the same. Even if they are not - there will be other like attempts.

To give you some perspective - I provide verbatim the email from BTC's Kevin Mitchell. I think it behooves all of us - no matter where we sit in the debate - to understand and then to consider what the impact will be. T2 Clients are indeed wrestling with this and we have clearly pointed out where we think it will end up. Lets just say I am somewhat bearish on the GDS model.

Cheers

TEXT follows: From Kevin Mitchell BTC.

Dear Travel Industry Colleague,

I write to you with a sense of urgency regarding a program Lufthansa (LH) introduced called Preferred Fares Program (PFP) that will increase corporate customers’ costs and undermine the highly efficient processes that have become the signature and goal of modern travel management. LH is imposing an indirect fare increase of tens of millions of Euros through its PFP, which will also include increased VAT and credit card costs as well as travel management company (TMC) handling fees.
If LH is successful in shifting virtually all of its distribution costs to its customers, undermining the best-practices of corporate travel managers, and tilting the competitive playing field to its advantage, other global airlines will have little choice but to implement similar programs. I ask that you to consider joining colleagues from around the world and lending your name to the Signatory Letter to LH below. (You can provide your approval to add your name to this letter at http://tinyurl.com/6xhgwg )
Background
In January 2008 LH announced PFP for gradual phasing in beginning 1 July 2008 in Germany, Switzerland, Austria and Lichtenstein. To make the PFP program deceptively “attractive,” LH raised its standard fares by €30 for a round-trip while offering the lower, original fare structure via PFP wherein a €4.90 per-segment surcharge would be applied. As such, a 4-segment roundtrip would cost €19.6 under PFP, compared with a €30 fare increase.
Once it determined that the LH surcharge was part of a larger TMC channel discrimination initiative, Amadeus announced that it would absorb the surcharge on behalf of its TMC subscribers until at least the end of 2008, while it pursued a resolution via negotiations with LH. Amadeus recently communicated its decision that on 1 February it will cease absorbing the LH surcharge.
The goal of the Signatory Letter below is to encourage LH to forge distribution agreements that are equitable for all distribution system participants, including the corporate buyer, and that preserve the efficiency of the present TMC channel.
Thank you for your consideration in this matter.
Best regards,
Kevin Mitchell
Chairman, Business Travel Coalition
+++
+++

DRAFT SIGNATORY LETTER
Tue Dec 9 09:06:28 2008
Mr Wolfgang Mayrhuber
Chairman and Chief Executive Officer
Deutsche Lufthansa AG
Airportring
60546 Frankfurt

Dear Mr Mayrhuber,
As major Lufthansa customers headquartered in Germany and around the world, we are writing to express our anger over your airline's imposition of an indirect fare increase of tens of millions of Euros through your Preferred Fares Program (PFP), which will include increased VAT and credit card costs as well as travel management company (TMC) handling fees.
Worse, your PFP surcharge will undermine our existing highly efficient corporate travel procurement processes by requiring customers to create new infrastructure and workaround procedures. We will be forced into an expensive and inefficient case-by-case analysis of which fare is more economical to purchase -- either a PFP fare with a surcharge and a TMC handling fee, or a standard fare offering.

Lufthansa is attempting to substitute its judgment for our clearly articulated preferences. Without collaboration, you are forcing a choice between a highly inefficient process for us and our TMCs, or paying significantly higher fares. This is a false choice and we do not welcome your unilateral approach. Corporate travel managers, in close collaboration with their TMCs and technology partners, have developed a professional and productive travel procurement environment that must not be poisoned.
The marketplace for commercial air transportation services is now highly transparent as a result of this longstanding and mutually beneficial collaboration. Complete fare information and point of sale functionality are now on one screen for both TMC agents and travelers utilizing automated booking tools. Now, travel managers can use this advanced purchasing process to drive business to preferred airline partners down to the city-pair level.
Your initiative to damage the existing TMC channel and its supporting technology partners; undo our progress in developing efficient, best-practice processes; and once again endeavor to dominate the point of sale is a flawed strategy strongly rejected by your very best customers. We need to find ways to strengthen our preferred channel, not weaken it.

Such negative actions on your part will make it more difficult and expensive for our companies to continue purchasing your product. Our companies, with air travel needs in markets where you are strong, and in markets where you seek to grow, will direct future business to airlines that build their distribution programs around our preferences. As you are no doubt aware, we do have a choice in air travel.
We urge you to promptly forge distribution agreements that are equitable for all distribution system participants, including the corporate buyer, and that preserve the efficiency of the present TMC channel. We hope you will eliminate the PFP program and rededicate Lufthansa to achieving our mutual success.

Sincerely,


You can provide your approval to add your name to this letter at http://tinyurl.com/6xhgwg

EU Definition of Parenting for GDS Geeks

Funny headline but a serious subject.

I am republishing this note from the BTC group. I urge you to at least understand the issue as it does reflect on the competitiveness of the market worldwide.

To call a spade a spade - there is both theory and practice in this debate. The practical issue is that only a single GDS - AMADEUS has airline owners. The logic however could be applied to undue influence further down the line with what happens due to GDS ownership or parentage of a distribution service such as a Travel Agency or OTA.

Here is the text: Read it - the issue is quite real.

Dear Travel Industry Colleague,

The recently missed opportunity to bring legislative clarity to the European CRS Code of Conduct is proof of how the interests of 380 million European consumers can be undermined. The time is now for travel suppliers, distributors, corporate buyers and industry groups to insist that the Commission clarify beyond any reasonable doubt the critical “parent carrier” language in its promised Interpretive Notice to assure that the three CRS-owning and board-sitting airlines are bound by parent carrier obligations.

I invite you to join a Signatory Industry Letter to the Commissioners of the Directorate-General for Health and Consumer Affairs (DG SANCO) and the Directorate-General for Energy and Transport (DG TREN). The proposed letter is pasted in below for your review. If you can lend your signature to this letter, please go to http://tinyurl.com/4tndnl by COB on Friday 26 September and so indicate.

Please consider sending this email invitation to your colleagues, customers or members who participate in the European travel marketplace. We seek the support of the entire travel and tourism industry on this issue of structural significance and strategic importance to the travel industry.

Thank you,

Kevin Mitchell
Chairman, Business Travel Coalition

+++
+++

SIGNATORY LETTER

Thu Sep 18 15:58:24 2008

Mr Antonio Tajani
European Commissioner for Transport
B-1049 Brussels

Ms Meglena Kuneva
European Commissioner for Consumers
B-1049 Brussels

Dear Commissioners Tajani and Kuneva,

We the undersigned travel industry consumers and representatives write to express our deep concerns regarding the current revision of the computer reservation system (CRS) Code of Conduct.

You will be aware that Parliament voted on 4th September 2008 to amend the CRS Code of Conduct as part of a compromise with the French Presidency. Given the significance of this legislation for consumers, and the wider travel industry, we have serious concerns about its effectiveness.

We would like to request a meeting with you to discuss which airlines will be considered “parent carriers” and thus, obligated under the revised Code’s restrictions on abusive parent carrier behavior.

As you know, parent carriers are forbidden from restricting the flow of air and rail fare information and booking functionality to competitive distribution services. These restrictions are necessary because of the historical fact that airlines that own or control CRSs have the means and the incentive to undermine airline, rail and distribution competition to the detriment of consumers. The recently missed opportunity to bring legislative clarity to the Code is positive proof of how the interests of 380 million European consumers can be undermined.

Despite the fact that Parliament’s Transport Committee overwhelmingly approved a set of amendments on 29 May 2008 providing a clear definition of parent carrier, a flawed plenary amendment was tabled as a result of a compromise with the French Presidency. Consumer groups actively sought clarification of this amended parent carrier definition due to the insertion of a dangerously ambiguous “decisive influence” test for parent carrier status. A large number of MEPs were concerned that this insertion rendered the code ineffective, and voted to delete the problematic decisive influence text in order to safeguard consumers. Unfortunately they lost a razor-thin vote (305 to 291) to remove this language from the legislation.

Europe’s consumers now look to DG TREN and DG SANCO to cooperate closely and bring forth an interpretative notice on the definition of parent carrier as promised by the European Commission during the recent plenary. This notice should serve to protect consumers’ interests by clarifying the notion of “decisive influence” in such a way as to ensure that three CRS-owning and board-sitting airlines--Air France, Lufthansa, Iberia--are bound by parent carrier obligations.

Assuring transparency is the only way to avoid regulation that works against consumer interests. The Commission has worked hard through its online ticketing investigations to provide price transparency for the purchase of airline tickets. Full disclosure of all airfare charges and fees codified in this CRS regulation is rendered meaningless if the consumer does not have visibility to the airfare offering in the first place.

We would be grateful if you could take the time to meet with us, as soon as schedules permit, in order to discuss the issues at stake in a timely manner, and to gain a better understanding of how you intend to proceed with protecting consumer interests. A representative of our group will contact your office to see when a meeting with you might be held.

Sincerely,

[signatory]
[signatory]
[signatory]


Note: This communication will be addressed to each Commissioner as an individual letter.



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