Northwest made a little bit of history recently when it withdrew
its flights and fares from the LowestFare.com Web site, claiming it was being
victimized by unfair, inaccurate or "biased" displays.
Some people will say this little scenario proves the need for
government regulation of travel Web sites.
Or you could consider the possibility that it proves exactly the
opposite.
Think back. Was there ever a time, since the advent of the CRS,
when Northwest, or any major airline, could afford to just walk
away from a CRS it didn't like? No way, not for long, anyway. Every
airline had to be in every system and put up with every system's
imperfections, and every system knew it. That's why they held sway
over all their airline customers. The airlines had no recourse, no
bargaining power. And that's why the government stepped in to
regulate CRS displays -- the CRS operators held all the cards.
But there's a big difference between the oligarchy of CRS
operators and the myriad desperate folk who are trying to make a
living selling airline seats on the Internet. Northwest said it is
going down the list of Internet travel sites to see how it is being
treated and is taking its concerns to the operators of those
sites.
Northwest has recourse for a change, and unlike the CRSs of old,
the operators of travel Web sites may find that they need Northwest
as much, if not more, than Northwest needs them.
We may have here the makings of a market solution to the issue
of on-line displays, something the CRS industry never had.
Our staff economist, if we had one, would probably say something
like "in the absence of barriers to entry or other structural
impediments, competition is a more efficient generator of product
improvements than government intervention."
If it works for hard drives and portable stereos, why not travel
sites?