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BTC denounces computer reservation deregulation

The Business Travel Coalition (BTC) deplored as misguided a scheme by some in the European Commission to quietly eliminate the time-tested CRS Code of Conduct.

These rules assure European consumers and corporate purchasers of having abundant and unbiased choices of travel services alternatives, and the affordable prices that result from effective competition.

Very importantly, the current Code prohibits CRSs from enabling, through MIDT tape distribution to airlines, the identification of corporate purchasers; this vital protection is now at great risk! (See 2002 EC communique here - .)

Mike Perkin, Manager, EMEA Travel, at Cisco Systems’ UK headquarters stated, “The current rules have worked exceptionally well to ensure that corporations have optimal levels of content; adequate competition among CRSs; minimal barriers to entry for low-cost and network new-entrant airlines; and unbiased travel management companies. To abandon these rules would represent a major setback for travel industry competition and buyer and seller efficiencies resulting in greater complexity and cost for all participants.”

Since 1989, virtually all travel reservations in Europe have been governed by these rules that were emplaced because of the structural incentives and actual anti-competitive and anti-consumer abuses by CRSs and their airline owners. The rules guarantee fair access to reservations in Europe for consumers.


(See BTC Commentary in the European Edition of the Wall Street Journal - .)

As determined in a 29 June 2005 BTC CRS Conference in Brussels, the only beneficiaries of elimination of the rules would be Lufthansa, AirFrance-KLM, Iberia, and Amadeus, the CRS that they jointly own and effectively control.

Commission Vice President Jacques Barrot is shepherding the total deregulation of these proven consumer protection rules over the well-considered and strong objections of a broad cross-section of stakeholders including leading Continental corporations that purchase business travel services, consumer groups, airlines, travel agents, business travelers and travel distribution companies.

The proposal is currently in “inter-service consultation” within the EC, and could be put to a formal decision before Christmas. The chosen process is to eliminate the rules without adequate due process by burying the CRS Code of Conduct under some 1,400 outdated laws such as a 1996 regulation governing the establishment of a potato starch quota system.

This proposal, and the exceedingly objectionable way in which it is being vetted, is directly contrary to the EC’s stated mission to promote “better regulation.” The EC’s own consultant, The Brattle Group, in 2003 advised retention of the rules. It is understood that the EC opted for the retention of the key rules governing CRSs in its own extended economic impact assessment in February 2004.

Contrary to established practice, there has been no new economic impact study produced to justify such a radical and high-risk change. Very importantly, and central to stakeholder concerns, is that several major European airlines continue to own a significant stake in Europe’s dominant CRS.

BTC Chairman Kevin Mitchell stated, “There is support in the travel industry for responsible reform of the EU CRS Code of Conduct but not a reckless and precipitous deregulation that will do considerable and irreversible harm to consumers, corporations’ data privacy protections and the competitiveness of the European travel industry sector.

BTC calls on the EC to subject this proposal to a thorough economic impact analysis as it has pledged to do with all significant regulatory review initiatives. The European Parliament, and the consumers it represents, deserves nothing less than full transparency of process and highly professional, competent analysis.”

Founded in 1994, the mission of the Business Travel Coalition is to lower the long-term cost structure of business travel. BTC is a Founding Member of the Brussels-based Coalition For Fair Access To Reservations In Europe (C-FARE).