he Transportation Department has made
some provocative proposals to update its ossified GDS rules. Many
agents may be disappointed that the DOT is not proposing to
regulate Orbitz
or other travel sites on the Web, but there's still a lot to like
in the government's 286-page opus.
Many agents will be especially pleased that after nearly two
decades, the DOT has come around to the view that not every airline
deserves to know exactly how much business every agency books on
every other airline. Under the DOT's proposal, airlines could no
longer purchase GDS marketing information data tapes that break out
individual agency sales data on competing airlines.
The DOT makes a number of other proposals designed to reduce
what it calls the "market power" of the GDS systems. The DOT
remains particularly concerned about the power of the GDS operators
to lock travel agents into restrictive, long-term deals that
inhibit their ability to use other systems or Web-based
alternatives.
But we are troubled by one of the DOT's suggested remedies for
this situation. The DOT proposes to curtail what it calls
"productivity pricing," a term that encompasses the various
credits, bonuses and incentives that GDS operators make available
to encourage agents to use their systems.
The DOT observes that productivity pricing encourages agencies
"to use one system for all or almost all of their bookings," and it
believes that this is bad because it shores up the market power of
the GDS operators. Some agents feel the same way.
But not every recipient of a productivity bonus is the victim of
GDS market power. Without productivity pricing or a consortium
preference, some retailers might be hard-pressed to afford a GDS at
all.
The DOT says productivity pricing frustrates its goal of giving
agents "more leeway to use multiple systems and databases,
including the Internet."
This is a fine goal for the government but it is not, and need
not be, the goal for every travel seller. We would urge the DOT to
proceed with extreme caution with any proposal that would reduce
travel agency revenue in an effort to remake the industry into the
government's image.
• • •
Reserving judgment
he final report of the National
Commission to Ensure Consumer Information and Choice in the Airline
Industry concludes that the problems facing travel agents are due
to economic forces that are beyond the ability of the government to
control by regulation.
We will have more to say about that next week. Meanwhile, we
urge agents to do what we are going to do: Read the report before
making the mistake of dismissing it as inconsequential.
The commission's full report is available on the Web at www.ncecic.dot.gov/report.asp. A printed copy of the
report can be obtained by e-mailing executive director Richard Fahy
at [email protected].