The Coalition for Fair Access to Reservations in Europe called on the European Parliament to close a giant loophole in the European Commission’s proposal for a revised Code of Conduct on Computerized Reservations Systems in order to continue to protect consumer choice, small travel businesses and competition among airlines and computerized reservations systems.
The giant loophole, which could become a noose for anyone who travels in Europe if not closed, concerns the definition of “parent carriers” of computerized reservations systems - the primary subjects of the CRS Code of Conduct.
Throughout its history, the CRS Code has applied to airlines that “own or control” a CRS as well as to any CRS which is owned or controlled by an airline. That’s because either ownership or control provides clear incentives for abuse. But the Commission has recently signalled its intent to reinterpret the definition of parent carrier to effectively eliminate the “ownership” standard despite the clear lessons of history and the unambiguous language of the rule.
“By failing to clarify the definition of ‘parent carriers’ the European Commission has adopted a decision that may not actually apply to anyone, thereby depriving European consumers of the protection that the Code was created to provide,” said Brandon Mitchener, executive director of the Coalition for Fair Access to Reservations in Europe. C-FARE (www.c-fare.org) represents a broad range of stakeholders including travel agencies, travel managers, ticket consolidators, business travellers and two CRSs.
With this giant loophole, Amadeus, Europe’s biggest CRS, and its three airline owners, which dominate both the air travel and travel distribution markets in many European markets including Germany, France and Spain, have been given a regulatory green light to consolidate their existing dominant positions, restrict access to critical information on their services and engage in other unfair competitive practices to the detriment of consumers and other market participants. For example, if parent carrier obligations no longer applied to Amadeus and its airline owners, airlines could provide more timely fare and seat availability information to Amadeus than to competing systems. Likewise, Amadeus would be free to provide Lufthansa, AirFrance-KLM and Iberia superior fare loading processes and privileged access to technology for the display and sale of their transportation—at the expense of consumer choice and to the point of foreclosing competition altogether.
During the consultation process, consumer groups, airlines, travel agents and travel managers and several CRSs warned the Commission about this loophole and asked it to reopen the public consultation so that a decision of this magnitude could be fully debated. The Commission refused this reasonable, repeated request.
“The Commission’s so-called ‘reform’ proposal fails to protect consumers and makes a mockery of the Commission’s publicly stated goal of introducing ‘better regulation’ for Europe’s citizens,” said Mitchener.
Amadeus is the only CRS that continues to be owned by airlines. In recent public statements and correspondence, Amadeus’s executives have said they believe the rules no longer apply to them because Lufthansa, AirFrance-KLM and Iberia own “only” 46% of Amadeus and no longer control the company. But C-FARE believes that the airlines’ continued ownership provides a very substantial incentive and means for abuse which is compounded by their high collective ownership and significant control over Amadeus.
“The Commission’s proposal gives Amadeus and its owners a license to engage in abuse,” said Mitchener. “Parliament and transport ministers should send a clear message to the Commission that they oppose this sort of deregulation by stealth. They can close this loophole either by establishing a parent carrier ownership threshold at 5% or by acknowledging that the parent carrier obligations apply today to Lufthansa, AirFrance-KLM and Iberia and that any future change in their status must be subject at a minimum to a public consultation and an impact assessment.”