EC Updates Banned Airlines List

The 13th update is now out

Interestingly a few airlines got clean bills of health but in general the list was expanded. The latest airline to get "restricted" is Iran Air.

All carriers from 17 countries – 278 companies in total – are banned: Angola, Benin, the Democratic Republic of Congo, Djibouti, Equatorial Guinea, Gabon, (with the exception of three carriers which operate under restrictions and conditions), Indonesia, Kazakhstan (with the exception of one carrier which operates under restrictions and conditions), the Kyrgyz Republic, Liberia, Philippines, Republic of Congo, Sierra Leone, Sao Tome and Principe, Sudan, Swaziland and Zambia. 10 air carriers are allowed to operate under restrictions and conditions - Air Koryo from the Democratic People Republic of Korea, TAAG Angola Airlines, Air Astana from Kazakhstan, Iran Air from Iran Gabon Airlines, Afrijet and SN2AG from Gabon, Air Bangladesh, Air Service Comores and Ukrainian Mediterranean Airlines from Ukraine. A further few airlines are also included outside this list.

For the full list go here:

http://ec.europa.eu/transport/air-ban/doc/list_en.pdf

Many companies ban their employees from flying on these airlines irrespective of where they fly. So it is important to note this airline list. There are a few players here who are commonly used carriers readily available in GDSs or other distribution tools. It is important therefore to check your current company policy compliance if you are a flyer. For a company HR and/or risk assessment company providing insurance coverage for staff - it would be important to remind people of the necessity of compliance to existing conditions.

Cheers

Timothy

The Sharks are Circling - European Consolidation

The survival of the fittest - law of the jungle - the metaphors could just keep right on coming. So now we have a fairly interesting game shaping up in the master consolidation of European carriers that seems to be going on.

The story so far has the bigger players, lets call them the sharks, being identified for us by Mr O'Leary. They are:

AF/KLM group
Lufthansa
British Airways

The fresh prey consists of the following:

BMI
Austrian
Alitalia
Iberia
Brussels Airlines

Just for fun there are several other players who want to play in the field. S7 (the former Sibir or Siberian Airlines), Aeroflot (who is denying everything), Turkish THY, and Virgin Atlantic for god measure.

At this point nothing can be taken for granted and now all bets are on. So clearly the stakes are going to rise. What do we know for sure? Nothing!!!

However if you are a gambler - here are some easy bets.

BA gets IB. Actually that is the only easy bet.

Here are the other bets:

LH should get Austrian but is being greedy and going after SN as well. They do have a call on BD.

AF/KL is the likely leader in the AZ battle but that one is far from over. Surprisingly they are keeping quiet about SN.

LH and BA are both making noises about AZ just to piss off AF.
SU is keeping its powder dry but Putin's long term goals have resulted in a semi serious bid for AZ before. SU will have enough trouble keeping the rest of the Russian domestic carriers afloat though. S7, TK,AF/KL are all making a run at OS - just to tweak LH's nose. VS wants BD, which is also coveted by BA.

The correct natural order of things should be LH gets OS. AF/KL are welcome to AZ, BD should stay independent, and the interlopers should probably stay out of it.

And just for good measure - there are other players who need a partnership of some sort. SK is in trouble for example.

So where is the European Commission in all of this? Remember that they approved AF/KL but disallowed EI to be acquired by Ryanair. And also remember that the current EC commissioner for Transport is - an Italian. So don't expect much out of Brussels.

This is guaranteed to play for a while and will be messy. If you are a conspiracy theorist - then perhaps you can think that there is some backroom with lots of smoke that has a few players deciding on the future air map for Europe.

Hang on for the wild ride folks....

EC Starts Anti-Trust Investigation Into BAAABI

And rightly so.

I have already made my case that this is not a good thing.

Check here for my logic - read this post again:

BAAABI's argument for immunity at LHR - not so fast boys

The lawyers must love this stuff

Cheers

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.

Cheers

Euro MPs target Hidden Airline Costs - perhaps they need to dig deeper.

MEPs (yes those nice people who clock in to claim their allowances of Friday) are at it again.

This time there is something useful in what they are doing. They want to challenge the pricing schemes of the website displays of airlines and travel operators to get them to show ALL the prices and all charges.

To some extent this is a problem that the EC has created. By complicating charges they are indeed creating and exacerbating the problem. The EC should perhaps look inwardly and examine how the charges are created so that Airlines and travel service providers could have a simpler way to calculate taxes and fees that they need to.

When that is done then lets throw the book at them. However if the USA model is anything to go by then the future does not look bright.

Additionally we see inconsistency of charges by the airlines. BA for example is far more aggressive in collecting taxes than say Delta.

if you would like to see that there are discrepancies - look no further a comparison of charges on the US airline shopping sites like Orbitz.

So before the MEPs get the knickers in a twist - perhaps they should look at the causes and address some of them

Cheers

Timothy

Alternative EC GDS Proposal supported by Consumer Groups

Several groups representing users' interests are throwing their weight behind the so called Kirkhope Amendment.

For the uninitiated or newcomers to this blog here are some of the background to the issue.

The European Commission (EC) is proposing to change its current CRS rules. The current regulation: Council Regulation (EEC) No 2299/89 of 24 July 1989 on a code of conduct for computerized reservation systems [Official Journal L 220 of 29.07.1989 can be found at the following URL: http://europa.eu/scadplus/leg/en/lvb/l24080.htm


The EU doesn't like the term GDS Global Distribution System and prefers CRS - Computer Reservation System. The old rules in essence were a different approach to fairness in displays on a travel agency terminal to those taken in the USA. ( For the US regs go here: http://www.dot.gov/affairs/Computer%20Reservations%20System.htm) Over time the importance of the GDS screen has lessened and issues of bias and control have taken on new forms as a result of the growth of the Internet and the global airline Alliances.

The new regulations are somewhat convoluted. But there has been a big issue raised over the definition of control. Essentially the EC has been under pressure from one of the GDS companies to eliminate the requirement for equal representation in all GDS if one of the players has an owner who is an airline. The only player to whom this effectively applies in Europe is Amadeus. Who just happens to be the dominant player in GDS across Europe. They currently have an ownership structure which is approx 44% airline owners (AF-22%, LH-11% and IB 11%) the balance is from two private equity firms. The debate is over the possible control.

Rightly or wrongly it would be a stretch of anyone's imagination to assume that these airlines do NOT exert a significant amount of influence on Amadeus to the benefit of the company. That said - some of the recent behavior demonstrates otherwise.

I fall firmly on the side of the level of ownership indicates a level of control. Consequently the airlines should play fair across the board and the regulations should reflect that. This so called proposed amendment seems to be a reasonable way of addressing the issue. I highly recommend that our readers go and review the current regs and the proposed changes. Get involved in the debate.

You be the judge!

Here is the text of the PR release issued today on the subject.

Travel Groups Support Kirkhope Amendments on CRS Reform
Rejects others that fail to close the Parent Carrier loophole
London, England, 20 May 2008--London, England, 19 May 2008--Ahead of political group meetings in Strasbourg this week to formulate positions within the European Parliament Committee on Transport and Tourism (TRAN) on the Kirkhope report on the CRS Code of Conduct, and in anticipation of a TRAN vote in late May on the report, the International Airline Passengers Association (IAPA), the Institute of Travel Management (ITM) and the Business Travel Coalition (BTC) late last week provided their initial reactions to the key amendments tabled. The letter as transmitted to the MEPs follows.
---
MEP LETTER
15 May 2008
Re: Consumer Organisations Voice Strong Support for Kirkhope Amendments and Urge Rejection of Amendments 44, 46 and 47
Dear Transport Committee Members:
Ahead of the Transport Committee vote on Mr. Kirkhope’s report on the CRS Code of Conduct, the International Airline Passengers Association (IAPA), the Institute of Travel Management (ITM) and the Business Travel Coalition (BTC) (the “Consumer Organisations”) would like to provide their initial reactions to the key amendments tabled. A more complete amendment endorser will follow once full translations have been released.
First and foremost, the Consumer Organisations would like to express their strong endorsement of Mr. Kirkhope’s proposed amendments to the Commission proposal. Of major significance is his solution to address the dangerous legislative loophole exposed in the Commission’s draft under the definition of ‘Parent Carrier’ (Article 2 (g)), by establishing CRS ownership as a fully independent criterion when assessing parent carrier status. The introduction of this test takes into account the incentives for abuse which exist for airlines meaningfully participating in the capital and governance of a CRS and limits the discretion of the Commission which had previously declared its intention to designate parent carriers on a case-by-case basis using ‘effective control’ as the only critical criterion . Mr. Kirkhope has the consumer’s best interests at heart and we heartily commend his approach.
A number of constructive amendments have been submitted calling for full divestiture by airlines with stakes in system vendors over time. Whilst airline divestiture would ultimately be the best solution for the Consumer Organisations, since it would completely eliminate the airline ownership problem that necessitates CRS rules, in the near term Parliament’s priority must be to ensure that any ambiguities are eliminated with respect to the existing Code of Conduct.
Mr. Kirkhope’s amendments in our view represent a significant and workable compromise in this respect. Failure to apply strict ex-ante rules to airline-owners of CRSs immediately will result in the reinforcement and creation of dangerous monopolies in a number of European countries. In our letter to Parliament (with additional signatories) of 3 April 2008 we wrote that since the Commission’s declaration of last November, which made it clear that the CRS Code of Conduct applies to no-one, airline owners have been free to discriminate in favour of the CRSs they own and CRSs have been free to discriminate in favour of their owning airlines. Travellers all across the EU and beyond are, as a result, at risk of being subjected to higher fares, less choice and poorer service.
Given the market conditions described above, we have grave concerns in relation to amendments 46 and 47, which provide the Commission with the continued competence to confer parent carrier status on the basis of ‘effective control’ alone. In a similar vein, amendment 44 eliminates the ownership test entirely, leading us directly back to the status quo and the same flaws exposed within the Commission proposal. These amendments are absolutely the wrong approach, since they disregard the consumer’s voice in order to give a regulatory free hand to a handful of national airlines which are free to abuse their CRS ownership positions. The notion advanced that the CRS rules should be harmonized with the effective control standards in the merger setting misses the point. In the interest of millions of dispersed European travellers, we strongly urge you and members of your group to reject these three amendments.
Our representatives remain at your disposal ahead of Parliamentary deliberations on the report.
Sincerely,
Jonathan French, Industry Affairs Spokesman, International Airline Passengers Association
Paul Tilstone, Executive Director, Institute of Travel Management
Kevin Mitchell, Chairman, Business Travel Coalition
###
CONTACT IAPA || Jonathan French | +44 (0)208 253 5052 | jonathan.french@iapa.co.uk
CONTACT BTC || Kevin Mitchell | 610-341-1850 | mitchell@BusinessTravelCoalition.com
---
About IAPA
The International Airline Passengers Association has been representing the interests for frequent travellers for more than 45 years. With offices in Dallas, London and Hong Kong, IAPA speaks for 400,000 travellers throughout the world.
About BTC
Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them.

When the Commission Proposal was released on 15 November 2007, a DG TREN spokesperson explained that an airline with an ownership stake in a CRS in their view was not a parent carrier unless it also effectively controls that CRS

Flogging now illegal in Europe

Commercial Blogging become illegal on Monday night in Europe. Those pesky people who wax lyrically and effuse wondrous statements about hotel sites and restaurants will now face the ire of the European Commission.

Not quite sure how it will get enforced but... oh well you have now been warned.

So ANYONE doing this is committing an illegal act.

This practice has some wonderful names:

Flogging
Astroturfing
CoBlo

So you have been warned hoteliers.

Does this mean that we will be clear of content that is not commercial in blogs. Far from it. But anyway... lets hope Tripadvisor and its ilk clean up their act(s) accordingly.

Cheers

Timothy

Is the EC trying some wizardry to appease Amadeus?

On the eve of the release of the Harry Potter final installment - perhaps we are seeing some signs and clues as to how the EC will define its long awaited changes to the GDS regulations. Up until now we have all assumed that the focus would be on the relaxation of the rules along the lines of the US deregulation of the GDS marketplace. But no - it would appear the bureaucrats in Brussels have other plans in store for us. The final chapter in this saga looks like it is going to have a few interesting plot twists and in the end The GDS/Harry character may not be killed off.

The issue it seems in the somewhat single tasking mode of the EC is that they are responding to some obvious pressure from the Amadeus lobbying efforts. They are now opening the door to the definition of "Parent" carrier. The origins of the "Parent" carrier term come from the 1980s when the battle was initially between the "Have" airlines - i.e. those who owned a part of a GDS vs. the "Have Not" carriers. Since this was clear at the time no one needed to have much definition. All EU based major airlines were all by definition "Parent" carriers by dint of the ownership stakes in either Galileo or Amadeus.

Fast forward to today and with the major airlines in the Galileo group all now non "Parent" carriers and even SAS is not an owner - then in Euro speak the definition is moot.

But I offer two other thoughts for consideration. The definitions of "Control" and "Distribution" should also be on the table for interpretation. Why?

Let’s start with "Distribution" the lines are now clearly drawn differently as we have fragmented distribution. With Amadeus focus now on airline IT it is not hard to see that actually distribution control can be effectively managed through the Airlines' PSS (Passenger Sales and Service aka internal Res Systems). So PSS systems are today doing much of what the GDS did before. If PSS systems were added into the loose definition of GDS in a redefined term of Distribution Platform then Amadeus would fail in my opinion the test of dominant control. Specifically we believe at T2 that the System User agreement should be examined in the same context as the "neutral" GDS agreements.

Now let’s consider the term "Control". The 3 participating owner carriers (and I choose my words carefully hear) are indeed much stronger than they were in the late 1980s and 1990s when the regulations were drawn up. Further the US share of the Transatlantic market has fallen significantly in actual passenger counts. The concentration of control among the 3 is pretty compelling.

However take both terms together - Control AND Distribution - and add ALL system users, CTP (Star Alliance - Common Technology Platform) users, all ALTEA users in the EU together and there is clearly a dominance and concentration of market power the likes of which we have NEVER seen before.

It was our hope that the EC would enact the new legislation for the protection of the consumer and the smaller EC airlines to prevent abuse of the monopolistic power concentration that can occur in situations such as these. Unlike the US market - the EC has the power of judge jury and executioner. They can both write and implement legislation. There is no check of the legislature at this level. Appeal to the judiciary is such a laborious process that it is effectively mute in all but the most high profile of cases. AND it takes many years of significant expense to challenge.

The story is not yet over and there will be many more plot twists. The EC has been known for using some of the Black Arts to conjure up dark forces cloaked in respectability. Let’s hope that
Olivier Onidi doesn’t turn out to be the real Voldermort.

For further reading we recommend going to the EC's Transportation section, Air Transport Portal: http://ec.europa.eu/transport/air_portal/index_en.htm.%20Specifically look a the comments on "Possible revision of Regulation 2299/89 on a Code of Conduct for computerized reservation systems (CRS)" http://ec.europa.eu/transport/air_portal/consultation/2007_04_27_en.htm
Note that the EC uses the older term CRS Computer Reservation System - rather than the more common GDS, Global Distribution System. Perhaps this different wording has an impact on the actual spells used.

OK so I carried the Harry Potter metaphor a bit far but my comments are valid. You have been warned. I have experienced first hand the power of the EC in this regard and how they listen to the "home team" of Amadeus lobbyists.

Other resources I suggest are to go to the BTC's website. http://businesstravelcoalition.com/

Cheers

Timothy

Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
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