Q: My agency often receives
airline debit memos for tickets that were auto-priced by our GDS
system. Auto-pricing occurs when we simply choose a fare displayed
by the system for a certain itinerary. We try to get the GDS vendor
to pay these debit memos, but it is always a time-consuming battle.
Are the vendors legally responsible to us or to the airlines for
auto-pricing errors? If not, why should my agency be responsible
for the debit memos? If we are responsible, what can we do to get
out of this common predicament?
A:
Under the standard contracts of all GDS vendors, the vendors are
responsible for nothing except providing access to their systems
and paying you for bookings. The contracts specifically disclaim
responsibility for the accuracy of the system and for any damages
that you suffer from using the system.
You may wonder why
the airlines do not bill the GDSs directly, since the airline can
always tell when a ticket was auto-priced by looking at the
reservation record. The answer is that, under the standard
GDS-airline agreement, the GDS vendor disclaims all responsibility
for pricing errors.
For example, the
participating-carrier agreement between Worldspan and Delta, which
Worldspan filed with the Securities and Exchange Commission a few
years ago as part of its plan to go public, states:
Worldspan disclaims
and participating carrier hereby waives all warranties ... or any
liability ... with respect to the ... data or services furnished
hereunder. Participating carrier agrees that Worldspan shall not be
liable for any ... damages ... even if advised of the risk of such
damages in advance.
So, assuming that
this agreement is a standard form that is similar to all
airline-GDS contracts, airlines cannot hold GDS vendors liable for
data errors, which would include pricing errors. Although such a
clause seems strange in the airline-GDS context, it is typical of
software and technology system contracts in general.
On the other hand,
the airlines hold your agency legally responsible for issuing
tickets at the correct fares. I have always had a hard time
understanding under what legal theory a travel agency can be liable
for tariff violations when it has no knowledge of the violations or
even a way to find out that a violation exists. Nevertheless, all
airlines claim that you are liable, so, as a practical matter, you
need to pay or otherwise settle the debit memos.
As a matter of
policy, the GDS vendors stand behind their auto-priced fares, so
thats why your vendor will pay or reimburse you for the debit
memos. Also as a matter of policy, the vendors seem to do so
grudgingly, so thats why the process is time-consuming and
frustrating for you.
One solution would
be to try to add a clause to a new or amended GDS contract that
would impose a legal obligation to pay and a deadline for the
payment. Then if the vendor stalls, you can just set off the debt
from any money that you owe the vendor.
At least one vendor
has been receptive to adding such a clause that says, (Name of
vendor) agrees to reimburse (agency) for debit memos that are
auto-priced through the system within 30 days of (agencys) request.
When you negotiate a new or amended GDS contract, ask your vendor
to add such a clause.
Mark Pestronk
is a Washington-based attorney specializing in travel
law.