Q: You have previously written that, if an airline
owning a CRS intentionally diverts bookings to its own Internet
site, the agency could have grounds for getting out of the CRS
contract. Has any vendor put such an escape clause into a CRS
contract? If not, what language should we suggest to the vendors
with which we are now negotiating?
A: No vendor has yet agreed to amend its
standard contract to permit the agency to terminate because of CRS
bypass. With rare exceptions, no vendor has even agreed to
meaningful reductions in quotas or bonus thresholds for the lost
bookings. However, if you have the time and negotiating power, I
strongly urge you to try to obtain such provisions from vendors
with which you are now negotiating.
Internet bypass can affect CRS deals in three different ways,
and you should try to cover all three.
First, since reduced CRS bookings can hurt your ability to meet
your quota, you should try to obtain a provision that will
automatically reduce the quota for any increase in bypass.
Second, since bypass will also inhibit achievement of quarterly
or annual thresholds for bonuses, including growth bonuses that you
thought you could count on, you need to try to find a way to get
the same bonuses with lower thresholds.
Finally, if bypass becomes very widespread, affecting your
ability to stay in business, you need a way to terminate the
contract.
The hard parts are how to define "bypass" and how to find a
measurable and mutually agreeable way of determining its extent. If
you are worried about loss of identifiable corporate clients, try
this language:
"In the event an airline owning 10% or more of the ownership
interest of [CRS vendor] induces any corporate client to make
reservations through the Internet, then the [quota and threshold]
shall be reduced by the monthly average [or total] of bookings [per
CRT] made by [the travel agency] during the preceding 12 months. In
the event that such reductions total more than 25% of [the travel
agency's] total bookings for the previous 12 months, [the travel
agency] may terminate this Agreement on 90 days written notice to
[CRS vendor]."
The quoted language would apply only to Sabre and Worldspan,
which are the two remaining vendors owned by U.S. airlines. Galileo
and Amadeus will probably never agree to escape clauses geared to
bypass, as each is as much a potential victim of bypass as you
are.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He answers your questions in the Crossroads' Legal Issues Forum.