OST-00-6984 / CRS Third Extension / Comments of Amadeus / March 13, 2000
Third Extension of Computer Reservations Systems (CRS) Regulations /
Docket No. OST-2000-6984
COMMENTS OF
AMADEUS GLOBAL TRAVEL DISTRIBUTION, S.A.
Amadeus Global Travel Distribution, S.A. ("Amadeus") hereby submits these comments in response to the Department's Notice proposing to extend the expiration date of the current CRS rules published at 49 CFR Part 255 by one year, to March 31, 2001. See 65 Fed. Reg. 11009 (March 1, 2000). Amadeus does not oppose the extension, which will give the Department more time to reexamine the existing rules and to consider appropriate modifications to those rules. Further, Amadeus supports the Department's tentative finding that the current rules should remain in force because they are necessary to promote airline competition and to protect consumers by ensuring access to complete and accurate information on airline services. In its Notice, the Department acknowledged that certain parties, including Amadeus, "have requested prompt action on certain additional CRS regulations," and that some issues raised during the course of the rulemaking proceeding "may be of such overriding importance that they should be addressed before the completion of the overall reexamination of the rules." Id. In this regard, Amadeus respectfully reiterates that the practice of tying access to certain corporate and other discount fares to the use of a CRS affiliated with the airline offering the
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discount fares presents precisely such an issue. Accordingly. Amadeus urges the Department to act expeditiously on its June 24, 1999 Petition for Interpretation of CRS Rules to address this widespread, anti -competitive practice.
In its Petition for Interpretation and its Filings in
Docket OST-97-2881 and related dockets, /1 Amadeus amply demonstrated that the fare tying issue not only deserves prompt regulatory attention, but that resolution of this problem requires neither substantial modification of Department policy nor (as in the case of the "parity clause" proceeding) completion of the ..global" CRS rulemaking. Amadeus has documented numerous instances of CRS-affiliated airlines refusing to make corporate discount fares available to entities that did not use their affiliated CRS. Several other commenters have also made clear that tying of certain discount fares to use of a particular system is widely practiced. Such tying undermines the core purpose of the CRS rules -- to prohibit bias in favor of those airlines that own or market systems. It also unduly restrains competition in the CRS market and substantially harms consumers by enabling a locally dominant airline to coerce travel agents and business travel departments to purchase the services of the CRS that it owns or markets. Any delay in rectifying the gaping loophole in the CRS rules will result in further injury to competition and to consumers. /2 As Amadeus has previously pointed out, the need for swift action by the Department is all the more compelling1/ Amadeus' Petition for Interpretation of CRS Rules was filed in Docket No.
OST-99-5888. Amadeus has also addressed this issue in filings made in Docket Nos. OST-97-2881 (comments on December 9, 1997 and supplemental comments on November 10, 1998) and OST-99-5132 (comments on March 12, 1999).2/ As noted, the Department has previously engaged in CRS-related rulemakings apart from its overall reexamination of the rules where the practice at issue caused competitive distortions and injury. See, e.g., 62 Fed. Reg. 59784 (Nov. 5, 1997) (parity clause proceeding) (
Docket No. OST-96-1145).
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because the preemption provision of the Aviation Code. 49 U.S.C. § 4171 3(b), 11kek, prevents injured parties from obtaining an effective state law remedy.
Amadeus has shown that the practice of tying access to discount fares to the use of an affiliated CRS constitutes an unfair method of competition and an unfair or deceptive practice under section 41712 of the Aviation Code, 49 U.S.C. § 41712, and contravenes established antitrust principles which underpin the current CRS rules. /3 Not only does such tying undercut the pro-competition/anti-discrimination goals of the rules, but it runs counter to the terms and purposes of section 255.8 of the rules to the extent that an airline that has affiliations with a particular system impedes a subscriber's use of another system or that a system owner airline ties the sale of air transportation or the receipt of commissions to the use of its system. See 14 C.F.R. § 255.8(b), (c), (d).
In its Petition for Interpretation, Amadeus asked the Department to interpret the CRS rules to prohibit the practice of tying the availability of discount fares to the use of a particular system. In the event the Department felt constrained not to address this matter through an interpretive ruling, Amadeus alternatively requested that the Department institute a rulemaking proceeding to amend the rules to more explicitly forbid such conduct. In light of the overriding importance of this issue, Amadeus once again strongly urges the Department to take expeditious
3/ In its March 8, 2000 supplemental reply comments in Docket No.
OST-97-2881, United Air Lines argues that there is no need for the Department to explicitly prohibit such tying because, to the extent such tying violates the antitrust laws, injured parties can resort to private remedies under those laws. However, antitrust actions can be time-consuming, expensive to maintain, and cumbersome, particularly in comparison to a clear and readily enforceable DOT rule. In light of the obvious competitive harm caused by such tying, and its pervasiveness, the Department should clarify in its rules that such conduct is unlawful under the unfair competition provisions of the Aviation Code. See also Supplemental Reply Comments of Amadeus, Docket Nos. OST-97-2881, OST-99-5881 (Dec. 13, 1999).
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action to prohibit the anti-competitive practice of tying discount fares to the use of a particular CRS.
Respectfully submitted,
David H. Coburn
Carol R. Gosain
STEPTOE & JOHNSON LLP
Tomas Lopez Fernebrand
Vice President and General Counsel
AMADEUS
March 13, 2000