March 4, 2008 - EU Parliament Regarding CRS Code of Conduct


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

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