240 Horizontal Competitors Agreeing To A New Worldwide Business Model Is Unacceptable
May 1, 2013, WASHINGTON, DC – Business Travel Coalition (BTC) at the close of business yesterday filed a letter in the U.S. federal government docket to Department of Transportation (DOT) Secretary Ray LaHood in strong opposition to the International Air Transport Associations’ (IATA) application before DOT for approval of its binding Resolution 787. The letter was signed by 214 travel managers, travel management companies and industry associations including the Scottish Passenger Agents' Association, Air Passengers Association of India, Brazilian Travel Agencies Association, Association of Canadian Travel Agencies, American Society of Travel Agents, Association for Airline Passenger Rights, FlyersRights.org and Consumer Travel Alliance. The letter can be downloaded at http://btcnews.co/ZUBwu7.
IATA Resolution 787, and its included “New Distribution Capability” (NDC), contravenes the public interest. NDC represents a new, worldwide business model for the pricing and sale of airline tickets that could structurally change the industry in unalterable ways adversely impacting all supply-chain participants, including the end customer. The “authenticated shopping” scheme represents IATA members’ aspirations for unchecked pricing power through an unprecedented invasion of privacy that would enable participating airlines to pinpoint with precision and charge higher prices to those travelers able to pay more.
The coalition expressed to DOT that a single firm is usually free under competition laws to endeavor to change an industry’s economic and operational models. It is a horse of a different color, however, when 240 horizontal competitors strategize behind closed doors and agree upon a new model for the pricing and sale of their products. Letter signatories firmly believe that horizontal airline competitors banding together to jointly adopt such a new business model by express agreement crosses the line. NDC is an agreement that has the purpose and would have the effect of stabilizing or raising prices charged to all consumers because it would end the air fare transparency that has checked airlines’ ability to raise prices. It thus likely violates U.S. and other countries’ antitrust laws.
“Given the potential anti-competitive and anti-consumer effects of Resolution 787, the unprecedented invasion of privacy for consumers and the added implementation and ongoing NDC-related costs to the industry and its customers, DOT should deny its approval,” stated BTC chairman Kevin Mitchell. “Travel industry associations, travel management companies and travel managers, who were 100% excluded from the NDC strategy-setting process, from six continents and 19 countries have spoken with one, strong voice to DOT Secretary LaHood urging him to reject IATA's application. DOT should exceed IATA's demand and expectation for a June 1 decision on its application and reject it straightaway," added Mitchell.