4 March 2008
Dear Members of Parliament,
We write on behalf of the European business travel community and corporate travel buyers, concerning the Parliament’s forthcoming consideration of the Commission’s proposal to revise the ‘Code of Conduct’ Regulation for Computerised Reservation Systems (“CRS”) [COD/2007/0243]. Mr Timothy Kirkhope is due to draft the Parliament’s Report on behalf of the Transport Committee.
For nearly 20 years the existing Regulation has governed the behaviour of the CRSs currently used by travel agencies to make reservations for their business and leisure customers, and of the airline owners of such systems (known as ‘parent carriers’). History has demonstrated the painful lesson that whenever airlines hold financial interests in CRSs they inevitably will engage in competitive abuses in both the airline and airline distribution sectors - unless this misconduct is effectively restrained by clear rules. Since nearly all corporate travel to this day is booked by travel agencies equipped with CRSs, the issue of getting the Code right is of especial significance to business travellers. A multitude of other stakeholders have expressed similar concerns, including BEUC and ECTAA (on behalf of European travel agencies).
On its face, the proposed revised Code seemingly includes all of the required safeguards against predations by parent carriers and systems they own. Unfortunately, this is not the case. At the final press conference announcing the revisions to the Code, the Commission volunteered the view that, despite maintaining the definition of parent carriers, specific airlines with significant stakes in a CRS were no longer considered parent carriers. Specifically, Air France, Iberia and Lufthansa, who collectively hold over 46% of the equity of the Amadeus CRS,(1) would not be subject to the revised Regulation.(2) Even in a regulated environment where overt abuses of market power to favour Amadeus have been curbed, these three airlines have found sufficient tools at their disposal to steer travel agencies to use the system they own that Amadeus boasts market shares of over 75% in each of the three Member States where its three airlines are dominant as air carriers.
Stakeholders have been stunned to learn that parent carrier rules in the EU today apply to no one. Nowhere in the consultation process did the Commission express this view, nor invite comments on the meaning of parent carrier, nor ask for submissions on the issue of the scope of application of parent carrier rules. Even more tellingly, none of the aforementioned airlines even suggested they were not bound by the parent carrier safeguards at the Hearing of 2 May 2007. To the contrary, the airlines complained the duties of a parent carrier were “obsolete” or “burdensome.”
Clearly this has rendered the most critical protections of the Code toothless. In ways that before were patently unlawful, the three Amadeus owners are now free to discriminate in favour of Amadeus, and Amadeus is free to discriminate in favour of its three owning airlines. The upshot is that travellers all across the EU are now staring directly into the abyss of higher fares, less choice and poorer service.
The German airline Lufthansa, believing it has a green light from the Commission to ignore its historic duties under the Code as a parent carrier of Amadeus, has already announced a scheme, to take effect in October, which will sharply increase the costs of travel for consumers in Germany.
Parliament has the opportunity to correct the parent carrier loophole created by the Commission to avoid detrimental effects for travellers across the EU. Without amendment travellers will face a less competitive environment for air fares, and many small/medium-sized travel agencies will find it increasingly difficult to remain competitive while operating rival systems to Amadeus. Accordingly, we call on the Parliament to close this dangerous loophole by amending the definition of parent carrier so as to leave no doubt that, given their ownership interests in Amadeus and their representation on its Board, Air France, Iberia, and Lufthansa remain parent carriers and must respect the historic safeguards against competitive abuses that have long applied to parent carriers.
We thank you for taking the time to consider this important matter.
Kind regards,
International Airline Passengers Association
Belgian Association of Travel Management
The Business Travel Partnership Ltd
Philips Electronics
Dow Europe
Lastminute.com
NATS
DuPont
Marathon Oil Ireland Limited
Lafarge
Sterling Jewelers Inc.
Trane
ABN AMRO Bank NV
Selfridges Retail Limited
LFC Consulting
TeleTech
Airtrak Travel systems
McMaster University
Shell Oil Company Nigeria
Inter IKEA Group
Elavon Financial Services, LTD
Expedia Corporate Travel
Norseman Travel Limited
The Travel Company Edinburgh
Yorkshire Travel Services LTD
O'Flaherty Holdings Limited
ExpressJet Airlines
Baillie Gifford & Co
Liberty Global Europe
RTW Travel Group Limited
Windsor & Neate Travel
Illinois Tool Works Inc.
Garber | FCm Travel Solutions
Ben Lawries Travel Ltd
Dawson and Sanderson Limited
Northrop Grumman
The Travel Centre Ltd
American Express Business Travel
Glen Travel
Harman International Industries
Travel Harbour
Novo Nordisk A/S
Medway Travel Limited
NetJets Europe
Travelogica AB
Travelstore
MH-Global Communications Network
HealthCare California
RTW Travel Group Limited
Windsor & Neate Travel
The Travel Bureau Ltd
Courtesy Travel
Online Regional Travel Group Ltd
Barrhead Travel Service
Camberley Travel Centre
S & N Pickford Ltd
Giles Travel Ltd
COMMODORE INT TVL
The Travel Bureau Ltd
Courtesy Travel
Online Regional Travel Group Ltd
Barrhead Travel Service
Camberley Travel Centre
The Corporate Travel Partnership
Matrix Travel
A.T. Kearney, Inc.
Johnson Controls
S & N Pickford Ltd
Giles Travel Ltd
The Travel Company Edinburgh
COMMODORE INT TVL
Tickets Anywhere
Omega Executive Travel
The Travel Professionals Ltd
Wayne Travel Management
Stewart Corporate Travel
Senior International Travel Ltd
Lupus Travel Ltd
Baxter Hoare Travel LTD
Baldwins Travel Agency
Fair's Fare
Norad Travel Group Ltd
Colpitts World Travel
Carnival UK
Tommy Hilfiger
Eaton Corporation
Travel Management Alliance
Sun Chemical Ltd Packaging Div
Corporate Travel Partners
IFC Specialists, LLC
Prime Findings,LLC
FANUC Robotics America, Inc.
Accelrys
University of Alaska
BuonViaggio Travel
Horizon Travel
QA Business Travel Ltd
Blue Marine Travel
John Proctor Travel
Forward Travel Management
Business Travel Direct
T2Impact Ltd
Huntsman
Acergy
Cresta World Travel
NetApp
HealthCare California
WebShoppingDepot
LasVegasConventionTravel.com Inc.
The Travel Team
MKI Travel and Conference Management, Inc.
MH-Global lCommunications Network