WASHINGTON -- The commission created by Congress to examine the
financial plight of agents finished six months of work by touting
the importance of agents' continued survival.
But the nine-member panel also concluded the government should
not intervene to help travel agents. ASTA's Paul Ruden was the lone
dissenter on this point.
The panel's conclusion may sound harsh, but commission members
say their report should be judged as a whole, not solely on the
scarcity of its recommended actions.
For example, the report's influence could extend to GDS
rulemaking, where commission testimony already has been cited in
the Transportation Department's rulemaking notice.
Also, ASTA plans to use some of the findings to make its own
case for legislative action next year. And the commission chairman
said he's been advised some members may be asked to testify in
broader aviation-related hearings in Congress.
"Just the fact that the commission was meeting had some
influence," said commission member Anne Mitchell, president and
owner of Carlson Wagonlit Travel/Travel First in Starkville,
Miss.
"We think it's a good report and will be useful down the
line."
None of that, however, can obscure the fact that the National
Commission to Ensure Consumer Information and Choice in the Airline
Industry essentially decided to take no action on the two agent
concerns that dominated the panel's four hearings: Web fare access
and Orbitz.
"The commission is concerned about the plight of travel agents
but believes that their problems are caused by economic forces that
lie beyond the ability of regulation to control," the commission
wrote in its report to Congress and the president.
On Web fares, the commission said mandating equal access for
agents would require "expensive and ineffective regulatory
intervention."
It also concluded that an equal access requirement "could cause
substantial injury to consumers by eliminating some low Web fares
entirely."
On Orbitz, the commission mostly deferred to the DOT and Justice
Department investigations. The commission, however, urged the
departments to "seriously consider" forcing Orbitz to eliminate the
most-favored-nation clause in its airline contracts.
Under that clause, an airline must provide Orbitz with all the
published fares it provides to any other third-party Internet
agency or posts on its own Web site, as long as Orbitz matches the
terms offered by the other Internet agency.
Three commission members dissented on that point, declaring
"there is nothing anticompetitive or harmful with an effort to
attract as many Web fares as possible to one Internet site."
The report did include three recommendations.
One involves debit memos.
The commission said airlines seem to have become "particularly
arbitrary" in issuing them, and agents need help to resolve the
disputes.
The commission wants ARC and the airlines to amend the Travel
Agent Arbiter program, established as a separate corporation as
part of the 1987 settlement of an ARTA lawsuit against ARC.
Half its funding comes from airline contributions and half from
agencies' annual ARC fee.
Kathleen Argiropoulos, ARC general counsel and vice president of
travel agency services, said she believes only one debit memo
dispute has been heard by the arbiter in the program's entire
existence.
The commission noted the program creates a barrier by requiring
the consent of both the agent and the airline before submitting a
debit memo dispute to arbitration.
It also suggested lowering the cost by letting most arbiter
disputes be settled in a paper proceeding instead of through a
hearing.
Argiropoulos said ARC has been working to get carriers to agree
to new procedures. But the commission wants to get the DOT involved
to give the airlines an extra push.
Under the commission's recommendation, Congress would direct the
DOT to convene airline and agency representatives and report back
within six months on their progress.
That also would apply to the commission's second recommendation:
that ARC provide agents a special box on tickets to include their
service fees.
Resolving that issue, first raised with ARC in 1995, could be
problematic.
U.S. and international carriers must jointly agree to worldwide
standards for fields on a ticket, and they've never been keen on
the service fee idea.
In its third recommendation, the commission wants the DOT to
report to Congress every two years on distribution issues.
Two key principles seemed to have driven the commission's
findings.
One repeatedly stated principle is that government intervention
would do more harm than good if it would do any good at all.
The second is that consumers have benefited from distribution
system changes, particularly Internet information and booking
options.
The commission said it "generally distinguished between
impediments [to distribution] applicable to consumers and to travel
agents" and later added:
"Although we find some information may be more costly for some
segments of the industry to access, there exist no significant
impediments to consumers' acquisition of information."
Perhaps ironically for travel agents, another factor in the
commission's decision against intervention was its belief that
agents will adapt and survive.
"I think all of us in the travel business have to realize our
world is evolving into a new kind of business, and we have to adapt
to that," said commission member Maryles Casto, president and chief
executive of Casto Travel in Santa Clara, Calif.
The report included a dissent from Ruden, ASTA's senior vice
president of industry and legal affairs.
Ruden said the commission's stated concerns about "the
unintended consequences of government intervention" should have
been outweighed by "the airline-intended consequences of
nonintervention," particularly on Orbitz and Web fares.
But no one joined his dissent, including the three agent
members. Asked why, one agent cited concerns that too much dissent
would detract from the report's hard-earned consensus, and all
three said they felt the report was balanced.