Alexandria, Va., March 28, 2002 - The American Society of Travel Agents (ASTA) today filed a new formal complaint with the Department of Transportation (DOT) against the major airlines that have cut commissions to zero and against Orbitz, the joint airline-owned Web site. The complaint asks the DOT to issue a cease and desist order against the zero commission airlines and Orbitz to stop them from withholding Internet fares from travel agents.
“The airlines in question have repeatedly and systematically reduced the base commission compensation paid to U.S. travel agencies and it`s our opinion that this, coupled with their refusal to grant travel agents equal access to fares sold over the Internet represents unfair practices and unfair methods of competition,” said ASTA President and CEO Richard M. Copland, CTC. “They left us with no other choice but to take our complaint to the DOT.”
The gist of the complaint seeks to remedy the inequities resulting from travel agencies` forced reliance on computer reservation systems (CRS) while considerably cheaper fares are often made available on the Internet. Travel agencies have no feasible alternative to using the CRS for several reasons: (a) the scope of total information available through CRS is unequaled by any other technology, (b) CRS contracts contain segment booking thresholds that financially penalize the agency for making bookings outside the CRS, (c) in most cases, a travel agency`s CRS is electronically linked to the agency`s automated back-office accounting and reporting system; thus, booking outside of CRS creates huge inefficiencies in an agency operation; and (d) using Internet booking services means that the agent must masquerade as the client and all communications then go to the client, defeating the agency`s role as the travel manager .
In the complaint, the Society wrote, “The differences between Internet Fares and CRS Fares often are hundreds of dollars, far in excess of any conceivable difference in the cost to the Airline Respondents of selling through the Internet channel versus the travel agency channel. These fares are referred to hereafter as `Extreme Internet Fares.` The difference between Extreme Internet Fares and CRS Fares is intended, and has the foreseeable effect, to induce consumers not to do business with a travel agency and instead to buy through each Airline Respondent`s Web site. [The] Airline Respondents have refused and continue systematically to refuse to provide Extreme Internet Fares to travel agencies for access through CRS.
“The travel agencies affected by the Extreme Internet Fares are, pursuant to long-standing practice and economic reality, engaged in active competition with the Airline Respondents and with the Cartel Respondent [Orbitz] for the business of consumers seeking to purchase airline transportation. The institution of `zero commission` policies by the Airline Respondents has the purpose and effect of reducing the unique costs incurred by the Airline Respondents in doing business with travel agencies to near zero or zero. Consequently, with the advent of zero commissions there is no business justification for the Airline Respondents` continued refusal to offer CRS fares at rates equivalent to Internet and Extreme Internet Fares.
“There can be no other reason for the airlines to behave this way if they are not trying to eliminate or at the very least reduce competition from travel agencies as independent sources of information and booking services,” said Copland. “ASTA has repeatedly said that consumers should have access to all fares regardless of the technology used to purchase their tickets. Withholding these fares from consumers and business travelers who choose to work with travel agencies is not only an unfair practice and unfair method of competition, it is also a blatant attempt by the airlines to exercise monopoly power over the distribution of air transportation. In the end, the result will be higher ticket prices to the consumer.”