ASTA Testifies Before Government Commission on Negative Impact of Airline Practices


Washington, D.C., June 12, 2002 - American Society of Travel Agents (ASTA) Executive Vice President and COO William A. Maloney, CTC, today was the first witness to testify before the National Commission to Ensure Consumer Information and Choice in the Airline Industry. Maloney`s testimony explained how airline activity threatens consumer access to price and schedule information, preventing optimal choice-making in the purchase of air travel.

Citing September 11 as “a dramatic example of the valuable services travel agents provide,” Maloney noted that as the rules and information related to travel continue to change, consumers will need travel agents in the future more than ever. He said, “Consumers will need to talk to real people-preferably someone they know and trust with current knowledge of the system, the new rules and the requirements for achieving safe and expeditious travel. Travel agents are the family farms of the transportation industry. The public should not be cut off from irreplaceable agency services at a time when they need them the most.”


Maloney outlined three major categories of airline marketing practices that negatively impact consumer access to information:


1) The use of airline market power to reduce travel agency compensation below the level a competitive market would produce; 2) The collective and individual actions to raise the operating costs of travel agents and to encourage consumers to book elsewhere; and 3) Collective airline action funneled through Orbitz to deny travel agencies and their customers equal access to all published fares.

“It is utterly implausible to believe, as the airlines argue, that air travel booking and ticketing services performed by travel agencies have zero value to the airlines,” Maloney told the Commission. “It is clear, we believe, that the largest airlines have exercised market power against travel agents by driving agency compensation below the level that a truly competitive market would provide.”

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To illustrate airline actions that raise travel agency operating costs, Maloney explained that American Airlines charged travel agents fees for processing refunds through the Airlines Reporting Corp. (ARC) in the weeks following September 11. American charged these penalty fees after giving travel agents changing, confusing and often conflicting instructions to on how to handle such refunds and despite the fact that processing the refunds through ARC cost American nothing.


Finally, Maloney told the Commission that “Joint airline ownership of Orbitz is designed to impair travel agencies` ability to compete by favoring Orbitz over other channels while simultaneously denying effective access to lowest fares for Orbitz`s competitors both online and offline.”


ASTA member Mike MacNair, president and CEO of MacNair Travel Management, Alexandria, Va., also testified today, saying, “The effects of the airline`s efforts to eliminate travel agency advocacy spill over to business travel as well. Travel is the third largest expense for the average U.S. business as stated by American Express and the process needs an advocate with equal and fair access to all fares.”


The Commission was established as a result of the passage of H.R. 1000, the Aviation Investment and Reform Act, to examine the impact on travel agents of airline marketing practices and to determine if impediments block the distribution of air travel schedule and fare information to the traveling public through travel agents. The language that created the Commission was first drafted in 1998 by ASTA and the Coalition for Travel Industry Parity (CTIP) as the Improved Consumer Access to Travel Information Act (ICATTI).


For ASTA`s complete testimony, see www.astanet.com/news/legfiling.asp.

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