Last month, I read that
the Justice Department filed comments in the Transportation
Department's GDS proceeding, asking the DOT to let the existing GDS
rules simply expire in January.
The DOT is proposing to extend and beef up the rules. How
can two agencies in the executive branch of the federal government
take opposing positions? What effect will the DOJ's comments have
on the DOT?
A: I can understand how a reader outside
Washington might be confused by what is going on here.
Think of it this way: The DOT merely proposed some rules and, as
long as they remain mere proposals, anyone outside the DOT is
entitled to file comments.
Once the DOT makes its decision on final rules, which it will do
by the end of this year, then its position becomes law, and every
other government department must support it.
The DOJ has filed comments from time to time in DOT cases,
especially those involving GDS rules and other aspects of airline
marketing. Until the present administration, the DOJ's comments
were not particularly well regarded by the DOT. Justice's points of
view were thought of as utopian or disruptive.
For example, in the past, the DOJ has asked the DOT to adopt a
"zero-booking-fee" rule, which would mean that GDS vendors could
not charge airlines for bookings and that travel agencies would
have to pay the GDS vendors for service.
This time, the DOJ's comments are practical and logical.
Regarding travel agency contracts and productivity pricing, it
says, "Because the regulations governing subscriber contracts have
been largely ineffective and may impose their own inefficiencies,
DOJ recommends that DOT allow those rules to lapse."
The Justice Department is not only opposed to a new rule banning
productivity pricing, but it is also opposed to all GDS contract
rules.
It won't do any good for the DOT to ban productivity pricing,
says the DOJ, because "if productivity-type payments continue to be
in the mutual interest of [GDSs] and subscribers, the parties will
have incentives to tailor their agreements to hide their true
effects and achieve the same result, while complying with the
letter of a prohibition against productivity pricing."
In other words, if the DOT were to rule on what is prohibited,
each vendor would quickly find loopholes anyway, providing
incentives for travel agencies to use its GDS over the others.
Let us hope that the DOJ's point of view will catch the
attention of the White House, which should instruct the DOT not to
interfere with travel agency contracts.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He answers your questions in the TravelWeekly.com
Legal Ease forum. To contact Mark directly, e-mail him at [email protected].