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.

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.

US DoT Tentatively Approves BAAABI. Branson Pissed

For some reason on a Saturday the US Dept. of Transportation has announced its approval of the BA+AA+IB transatlantic alliance. In a continuation of its policy of pro-oligopoly, it demanded only a small concession of 4 slot pairs at LHR be surrendered. Far less than the EC has demanded and far less than its own demands 8 years ago for 16 daily slot pairs to be surrendered.

Virgin Atlantic Chairman Richard Branson is obviously not a happy person.

Already the applause has come from some groups such as BTC who believes that 3 alliances are an inevitability. Given the previous rulings it is unlikely that the EC will impose greater restrictions but it does seem to be a bit of a joke to only ask for 4 slots to be surrendered. A far better arrangement would have been to demand that new slots be made available for new entrant carriers. But the status quo seems to be the protectionism and cronyism that has been a hallmark of the US DoT.

If the competitive authority was truly doing its job then it should open up the market for total freedom. Well we shall see. Next week in Spain the negotiations for the next round of Open Skies between Europe and the USA open up. High on that agenda will be total deregulation and relaxation of sovereignty rules.

Cheers

When Is A Guaranteed Fare Not One? Ask BA

During the past week we have seen what can happen when an iconic brand is severely damaged by a single event - intentional or not.

One of the integral parts of the Air Transportation system is that the contractual relationship between the airline and its customers is firm and hard.

The customer is required to perform and the agent in the middle (should there be one) is required to ensure enforcement of many complex and in quite a few cases seemingly arcane rules.

This is the basis of the passenger airline system. So it comes as a big surprise to find out that the product you buy as a consumer from the airline is not in fact guaranteed.

The case I am specifically pointing to is British Airways and the infamous $40 fare from the US to India. The details are not in dispute - but 2200 people bought the fare. Can you say Viral!!!!

BA canceled the bookings and offered a $300 compensation credit. Then the DOT stepped in. At which point BA upped the ante and provided additionally compensation for the impact of the canceled reservations with hotels cars etc.

if you would like to read BA's statement on the matter (its quite buried below the fold) click here. But do it quickly I doubt it will be there long.

When the DoT stepped in the Secretary was happy to report:"We are pleased to see that British Airways has accepted responsibility for the fares it published," Ray LaHood said.

I think that both BA and the DOT were fundamentally wrong here. BA for the initial mistake and not honouring its fares and the DOT for creating a precedent and effectively a get out of jail free card for any airline who doesn't like the fares they have contracted for. Chaps this is not good at a time when Congress is agitating for a Passenger Bill of Rights - you have collectively undermined the whole basis of the contract between any airline and the general public with the DOT's blessing.

So Go On Be A .... Tiger

New US DoT Secretary

So the new broom is sweeping clean in a couple of places.

One of the early appointments is the Secretary of Transportation. Former Rep. Ray LaHood, R-Ill., won unanimous Senate confirmation on Thursday to head President Barack Obama's Department of Transportation. The 63-year-old LaHood called the Cabinet post "the capstone of my public service career," and said "it shows the whole idea of bipartisanship and working with people across party lines was not just a political slogan." In his confirmation hearings, LaHood vowed openness and fairness in overseeing the flood of public money expected for transportation projects under the president's stimulus plan.

For Airlines this means a long awaited fix (we hope) to the ATC system. Of course this will require some money - this part of the "Stimulus" package. However with airlines cutting capacity and travelers staying away in droves - the Feds may need to look to new revenue sources for paying for this new system upgrade.

Lets wish LaHood well. He has a tough road ahead. Let's also hope that he recognizes the value of air transportation and allows the system to grow as it will need to do. During the down year of 2009 - if there is a swift implementation - we can see better performance within the system. It isn't just technology that will make this work but better processes and procedures. Challenge everything. We sure need to.

Cheers

DoT Concludes Competition is Good

The US Department of Transportation in something of a stunning revelation has concluded that competition is actually good for the airline market.

While subtly trying to argue its case for Caps and the Slot Auction at the 3 major New York Airports - it released the results of its study of activity when competition is introduced into a market.

I am so glad our tax dollars are really at work effectively.

For further details go to the ATA - Air Transport Association of America site www.airline.org or the DOT website www.dot.gov. specifically the following page:
http://www.dot.gov/affairs/dot15908.htm

Joy!!!!

BRAVO US DOT! No to holding onto unused authority

The US Dept of Transportation has for once been reading the tea leaves correctly and decided it would be un-catholic to let the holders of unused International Route Authority hold onto that while they tried to recover.

There are several urgent items out there.

US Airways new route authority to China.
United’s Moscow route and the withdrawl of Denver London
Northwest’s suspension of several European routes.

Of course with Open Skies the EU authority is not required but for Latam, Asia based routes this could be an interesting game.

Let’s see what happens next