I have heard the
Department of Transportation wants to outlaw GDS bonuses because it
thinks the entire system of quotas, shortfall penalties and bonuses
-- known collectively as "productivity pricing" -- may be
preventing agencies from using other booking methods that may be in
the consumer's best interest.
Does the DOT have any evidence that agencies are booking
fares that are not in the consumer's best interest?
A: The DOT has no evidence. It is merely
suspicious that agencies may be acting contrary to the consumer's
interest because GDS vendors give agencies an incentive to book
through them and assess penalties when a minimum isn't reached.
It now is up to the trade to show the DOT that its suspicion is
not well-grounded.
On the day this column appears, all interested parties will be
filing their comments in the GDS rule-making proceeding.
It is probable that several airlines will support the proposed
ban on productivity pricing, just as they did in 1997, when the DOT
last sought comments on these issues.
The anti-bonus carriers included Delta and Continental. These
airlines naively asserted that if GDS bonuses were eliminated, they
would pay less in booking fees.
In Delta's case, as Alan Fredericks wrote in a column last May
20 [Traveling,"Airline Double-Talk"], "there are so many
ironies in the airlines' arguments that it's hard to know where to
begin."
It was ludicrous for the largest owner of Worldspan to complain
to the government about GDS booking fees. (Earlier this month,
Delta, Northwest and American agreed to sell their shares in
Worldspan.)
Larger, corporate-oriented travel agencies would bear the brunt
of any decision to outlaw productivity pricing. They need to show
the DOT that their current GDS contracts leave plenty of room to
make non-GDS bookings without incurring shortfall penalties.
The agencies also need to show that they do make such bookings
regularly -- on the Web, on secondary GDSs and even through
Web-booking enhancements provided by their primary GDS vendor.
The GDS vendors themselves need to show that they now are
offering kinder, gentler contracts that allow agencies ample
cushions to make non-GDS bookings without incurring penalties.
They also need to emphasize their efforts to induce airlines to
place their Web fares in the GDS in return for price breaks on
booking fees.
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].