WASHINGTON -- Amid a torrent of comments submitted to the
Transportation Department, ASTA and ARTA agreed the department
should ensure fair competition that will keep fares low but
disagreed on the best way to do it.
ASTA praised the DOT's effort to reign in a "cartel-like
industry" but said the department should forget about issuing a
written policy and instead "get on with the task of enforcing a
policy [promoting] competition" by taking an airline to court for
predatory and anticompetitive conduct. Such cases "would tell other
airlines as much or more about how to adapt their behavior than the
policy statement will," ASTA said.
On the other hand, ARTA joined nine other organizations --
including the Business Travel Coalition, which represents a number
of major corporations, and Total Travel Management, a large
corporate agency based in Troy, Mich., in endorsing the DOT's
approach and advocating even tougher sanctions against airlines
that violate the policy. ARTA president John Hawks contended that
ASTA's approach would not work because court rulings would be too
narrow to establish a broad, industrywide standard.
Under the DOT's proposed policy, carriers would be punished if
they try to drive new entrants out of business by flooding a market
with cheap fares and extra seats.
In other comments from the trade, American Express ignored the
bulk of the DOT's proposal and instead focused almost exclusively
on defending override commissions, which the DOT said were among
the factors it would examine. Overrides are good because agents
often rebate them to corporate customers and because they give
agents another source of revenue at a time when airlines are
cutting commissions, it said.
"Travel agents directly promote competition between airlines by
helping customers make informed choices between multiple airlines,"
American Express said. "To the extent you contribute to the demise
of the travel agent industry, you will succeed in accomplishing the
exact opposite of your goal of promoting competition."
The Interactive Travel Services Association urged the DOT to
mandate "nondiscriminatory" treatment of on-line travel agents,
including the elimination of lower commissions for Internet
bookings. The association contended that DOT involvement is
justified because on-line sites operated by accredited agencies or
by companies booking through accredited agencies give new entrants
visibility and a direct link to consumers.
In support of the proposal, Rep. Louise Slaughter (D-N.Y.) came
to a press conference armed with more than 170 letters from
Rochester-area residents and businesses angry about fares and
service.
At the press conference, Business Travel Coalition chairman
Kevin Mitchell blasted airlines for spending millions on ads and
political campaign contributions to stop the proposal.
Meanwhile, the Air Transport Association and the major airlines
argued the policy would hike fares by preventing major carriers
from competing against new entrants. The ATA lauded the support of
two economists cited by the DOT in its 10-page policy justification
-- albeit for a single paragraph that referenced their study on
predatory pricing -- and Northwest submitted a 51-page argument
against the policy written by Laura D'Andrea Tyson, former chair of
President Clinton's Council of Economic Advisors.