Corporation today welcomed the filings of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) in the Department of Transportation`s (DOT) computer reservation system (CRS) rulemaking proceeding.
In a June 9, 2003 filing, the Justice Department called for near total deregulation of the CRS industry as of January 31, 2004. The DOJ said that the CRS rules “have failed to make the CRS industry more competitive, have imposed costs of their own on consumers and should not be extended.” The DOJ recommends that very limited rules be retained, to address concerns about biased displays, and bias against carriers in the loading of their data and “possibly certain types of MFN” (most-favored-nations clauses) in airline contracts. The DOJ specifically recommends that the DOT drop all rules that restrict the terms and conditions of CRS agreements with travel agents.
In a separate filing with the DOT, the FTC rejected the DOT`s legal justification for the onerous CRS rules proposed by the department in November 2002, noting that they rely on an erroneous reading of current antitrust policies and existing case law. In particular, the FTC rejected the DOT`s reliance on the discredited “monopoly leveraging” and “essential facilities” doctrines.
In comments filed with the DOT yesterday, Sabre Holdings called for the government to sunset the existing CRS rules when they expire on January 31, 2004. The company called the proposed CRS rules “unbalanced” and the existing rules “obsolete.” Abusive conduct by airline owners of CRSs prompted the Civil Aeronautics Board to adopt the original regulations in 1984 and the DOT to retain them in 1992. However, the elimination of airline ownership and the tremendous growth of the Internet as a tool for booking air travel have eliminated the need for those regulations today. Many other industry participants have echoed the company`s views.
In its comments, Sabre Holdings said that a deregulated market is now the best choice for the travel industry and the nation`s economy. As an independent CRS, the company`s goal is to provide its customers with comprehensive access to travel information, including flights and fares. The company believes that the DOT`s ill-conceived attempt at regulation would increase travel agent costs and passenger fares, deny consumers the benefits of competition, and disadvantage low-cost airlines.
“Sabre Holdings applauds the DOJ and the FTC for advancing these important views,” said David Schwarte, Sabre Holdings` executive vice president and general counsel. “The DOJ has pointed out that the rules generally do not work. And the DOT`s rulemaking principally relied on interpretations of the law that the FTC has now revealed as outdated and incorrect. In short, the foundation of these proposed rules has now been exposed to be unsound.
“Traditional antitrust enforcement and consumer protection laws should be relied on for this industry just as it is for virtually all others, to ensure that consumers receive the benefits of a highly competitive marketplace,” Schwarte said. “Open competition in this dynamic market will produce an outcome far better for consumers than governmental central planning.”