Recent Carrier Actions Threaten Independent Distribution of Travel for Millions of Consumers; DOJ Opens Investigation into Airline Practices
Washington, D.C. – The Travel Technology Association (Travel Tech) issued the following statement after the Department of Justice (DOJ) confirmed it has opened an investigation into alleged anti-competitive actions by airlines and following comments at a recent meeting of the International Air Transport Association (IATA) outlining a potential industry trend toward anti-consumer behaviors: Consumers – whether they are leisure or business travelers – benefit greatly from the ability to search, compare, and book travel via the advanced technology solutions created and deployed by Travel Tech’s diverse membership. Global distribution systems (GDSs), online travel agents (OTAs) and meta and travel research websites have been integral in creating a vibrant 21st century travel marketplace for consumers. We applaud the Department of Justice for its interest in protecting air travel consumers. There is less competition in air travel due to carrier consolidation. As a result, it is more important than ever that consumers continue to have the ability to effectively shop for transparent travel options across suppliers.
Travel technology innovators connect the travel marketplace in ways that benefit the entire travel supply chain, from consumers to suppliers. These benefits are currently being threatened on several fronts: “…Online technologies with amongst the most powerful search engines in the world, run by Orbitz, Travelocity and Expedia, have really created a customer revolution. Customers can now quickly and easily compare the offerings of competing carriers on any given route, and if they so choose they can push the ‘lowest applicable fare’ button and they’re guaranteed to see low prices from the choices that they select.” The Travel Technology Association agrees that independent travel distribution benefits consumers and provides a competitive check with airline-owned channels. Since then, some air carriers have done nothing but work to undermine independent distribution and side-by-side comparison shopping consumers currently enjoy. There is no doubt that eliminating an open, transparent market will harm consumers because it already has. As the DOJ, DOT and Congress look more closely at the state of the airline industry, these and other issues should be considered.
- Several airlines have adopted policies that restrict the availability of fare and schedule information in the marketplace. Limiting access to airline content through the independent channel – which provides travelers with the transparency and choice they demand – negatively impacts consumer welfare. A recent study on this topic is available at TravelTech.org.
- Discriminatory surcharges and fees imposed only on those who choose to book travel via channels other than with the airlines directly. These actions run counter to the travel marketplace goals of efficiency, transparency, competition and consumer choice that have made travel such an important economic engine in the United States and other countries around the world. It is particularly important that consumers not be financially penalized for using travel tools that allow them to comparison shop for airline travel or manage business travel. Even if the number of airlines from which to choose has diminished over time through consolidation, consumers should still be able to shop in an open, transparent marketplace.
- Recent statements by airline executives during a June roundtable discussion hosted by the International Air Transport Association (IATA). The group of airline CEOs discussed recent actions by a single airline to implement new discriminatory surcharges on consumers who choose to book travel through third-party channels.
- The events at the Miami IATA meeting may suggest a coordinated effort by the airlines present – and by the larger trade group – to promote and potentially collectively impose the surcharge. Those events raise serious questions as to whether the airlines and IATA departed from their obligations to compete, not coordinate, when it comes to the imposition of fares, fees and surcharges on their customers. That the context for those discussions was the imposition of a fee that by design will make it more expensive for consumers to compare flights and fares makes the actions of those airlines and IATA all the more troubling.
During a U.S. Senate hearing on the Delta-Northwest merger in 2008, testimony was given that specifically pointed to independent distribution as a way to maintain competition in a consolidated airline industry:
