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OST-97-3014

Travel Agent Comments

America West Airlines, Inc. (Petition for Rulemaking, Limit CRS Vendor Charges to Booking Fees / Comments in Response to ANPRM CRS)

OST-97-3014 | OST-97-2881 | October 14, 1997

Petition of America West Airlines for Rulemaking

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This petition proposes modest amendments to the CRS rules in Part 255 of the Department's Economic Regulations designed to mitigate the adverse effects of the CRS vendor charging practices that have evolved since the Department's 1992 review of those rules. CRS vendors now exploit their market power over participating carriers which pay for the booking transactions by encouraging abusive and fictitious bookings by travel agents on a CRS and requiring participating carriers to pay for them. As described in detail in this Petition, the CRS vendors have developed pricing policies which marry a requirement that participating carriers pay booking fees for unnecessary and abusive CRS transactions with incentive programs provided by the vendors to travel agents which foster the abusive CRS usage. These abusive practices include fictitious, speculative and duplicative bookings as well as passive bookings, which may be used to generate bogus reservations or improper fares and other transactions of no benefit to the participating carrier. By use of this pricing strategy, commonly referred to as either transactional or net segment pricing, participating carriers are forced to pay for a multitude of CRS transactions which are unrelated to whether any passenger travels on the airline. Thus, participating carriers are subsidizing the CRS-owning carriers through millions of dollars in excessive payments for these improper and abusive bookings. In addition, the CRS vendors further exploit their market power by refusing requests from carriers to terminate the capacity for travel agents to make passive bookings, the principal source of improper charges, or to take action to prevent other improper uses of the CRSs. These practices result, among other things, in the spoilage of airline inventory and improper over-booking situations, which, in turn, raise participating carrier costs and cause consumer harm through higher fares and delayed or unavailable flights.

Counsel: America West and Baker Hostetler, Joanne Young, 202-861-1532

Computer Reservations System Regulations

OST-97-3014 | OST-97-2881 | Published in the Federal Register November 7, 1997

Request for Comments

The Department is inviting interested persons to comment on a petition for rulemaking filed by American West Airlines that requests two new rules governing computer reservations systems (CRSs). America West asks the Department to amend its CRS rules (14 CFR Part 255) to include a prohibition against certain CRS practices that allegedly impose higher booking fee costs on airlines and enable travel agents to make transactions that damage an airline's ability to control its inventory. The Department invites persons wishing to comment on America West's proposal to include those comments in their responses to the Department's advance notice of proposed rulemaking in Docket OST-97-2881.

By: Patrick Murphy

Computer Reservations System (CRS) Regulations

The Department is inviting interested persons to submit supplemental comments in this proceeding where the Department is reexamining its rules on computer reservations systems. The Department is issuing this supplemental advance notice for two reasons: to invite parties to update the comments submitted earlier in this proceeding and to address the impact of industry developments that have occurred since the comments were filed, and to invite them to comment on whether the Department should consider adopting rules governing the use of the Internet for airline distribution. DATES: Comments must be submitted on or before September 22, 2000. Reply comments must be submitted on or before October 23, 2000.

By:  Bradley Mims

Computer Reservation System (CRS) Regulations

Cited Material submitted by Tom Ray, Office of the Assistant General Counsel for Litigation.  

By:  DOT, Assistant General Counsel for Litigation, Tom Ray

Computer Reservation System (CRS) Regulations

By:  Donald Pevsner

Computer Reservation System (CRS) Regulations

By:  ACA, Edward Faberman, 202.639.7502

Computer Reservation System (CRS) Regulations

By:  ASTA, Paul Ruden

Consumers Union is concerned with the potential for the presentation of biased information by all sellers of airline tickets -- both on and off-line travel agents. Despite the declining ownership of CRSs by airlines, biased or inaccurate information is a major barrier to price competition in this market, because competition depends, in part, upon accurate and unbiased information regarding available air travel tickets. As discussed above, DOT has the clear authority to prohibit unfair or deceptive practices in the sale of air transportation. Consequently, we believe it imperative that DOT exercise this authority to promulgate new CRS rules that impose a non-bias requirement on all systems engaged in, or used for, searching and booking passenger air travel arrangements.

Counsel:  Consumers Union, Janell Mayo Duncan

Computer Reservation System Regulations

Counsel:  Amadeus and Steptoe Johnson, David Coburn, 202-429-8063

By:  Albert Foer

Counsel:  Squire Sanders, Marshall Sinick, 202-626-6600

Counsel:  America West and Baker Hostetler, Joanne Young, 202-861-1532

Counsel:  American, Bruce Wark, 817.967.5647, bruce.wark@aa.com 

Counsel:  Global Aviation, Charles Chambers, 202.457.0212

Counsel:  Boros Garofalo, Don Hainbach, 202.822.9070

Counsel: Continental and Crowell Moring, Bruce Keiner, 202-624-2500, rbkeiner@cromor.com

Counsel:  Expedia and Preston Gates, Donald Kaplan, 202-628-1700

Counsel:  Covington Addis, Carolyn Corwin 202.662.6000

By:  Antonella Pinalto

Counsel:  Lufthansa, Arthur Molins

Counsel:  Silverberg Goldman, Robert Silverberg

Counsel:  Baker Hostetler, Joanne Young, 202-861-1532

Counsel:  Zuckert Scoutt, Frank Costello, 202.298.8660, fjcostello@zsrlaw.com 

Counsel:  Squire Sanders, James Dick, 202-626-6600

Counsel:  United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, brabinovitz@wilmer.com 

Counsel:  Zuckert Scoutt, Charles Simpson, 202.298.8660

Computer Reservations System Regulations

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

By:  Marshall Fein

Counsel:  Northwest, Glenn Fuller, 612.726.1231, glenn.fuller@nwa.com 

Counsel:  Sabre, Sterling Miller, stirling.miller@sabre.com 

Computer Reservations System Regulations

By:  American Express Travel, Sarah Wynn, 212.640.5774

Counsel:  Silverberg Goldman, Robert Silverberg

By:  NBTA, Marianne McInerney, 703.684.0836

Counsel:  Northwest, Glenn Fuller, 612.726.1231, glenn.fuller@nwa.com 

Counsel:  USTAR, Bruce Bishins, 416.922.6332, bruce@ustar.com 

Counsel:  Andrew Steinberg, 817.785.8108, andy@travelocity.com 

Counsel:  Ungaretti Harris, Edward Faberman, 202.639.7501

Computer Reservations System Regulations

By:  Don Rounds

Computer Reservations System Regulations

By:  Jose da Rosa

By:  Rosenbluthinteractive, Hal Rosenbluth

Computer Reservations System Regulations

By:  ACA, Edward Faberman, 202.639.7502

By:  Squire Sanders, Marshall Sinick, 202.626.6600

By:  Steptoe Johnson, David Coburn, 202.429.8063

Counsel:  American, Bruce Wark, 817.967.5647, bruce.wark@aa.com 

Counsel:  Baker Hostetler, Joanne Young, 202.861.1532

Counsel:  Boros Garofalo, Don Hainbach, 202.822.9070

Counsel:  Crowell Moring, Bruce Keiner, 202.624.2500

Counsel:  Delta and Shaw Pittman, Robert Cohn, (202) 663-8060

Counsel:  Covington Addis, Carolyn Corwin 202.662.6000

Counsel:  Zuckert Scoutt, Frank Costello, 202.298.8660, fjcostello@zsrlaw.com 

Counsel:  Zuckert Scoutt, Charles Simpson, 202.298.8660

Computer Reservations System Regulations

Counsel:  ITSA, Antonella Pianalto

Counsel:  Northwest, Glenn Fuller, 612.726.1231, glenn.fuller@nwa.com

Computer Reservations System (CRS) Regulations

The Internet travel industry will continue to evolve even more quickly than the CRS industry, and it will remain important for the Department to monitor the competitive atmosphere for airline distribution over the Internet. Should the Department conclude that its intervention in this vibrant market ultimately is necessary, that intervention should be narrowly tailored to address a particular harm.

Counsel:  Verner Liipfert, William Evans, 202.371.6030

Computer Reservations System (CRS) Regulations

Counsel:  Ungaretti Harris, Edward Faberman, 202.639.7502 

Counsel:  Wilmer Cutler, Bruce Rabinovitz, 202.663.6960, brabinovitz@wilmer.com 

Computer Reservations System (CRS) Regulations

Competition hardly exists any longer. What CRS information is needed at dominated hubs? For example, today American has 30 flights per day from Dallas to the New York area while Legend Airlines has 4. Delta has 41 flights to the New York area while AirTran has 12. Northwest Airlines has 23 flights to the New York area while Sun Country has 2. What legitimate information do these large carriers need to have on sales to New York? Their only interest is in finding out who dares to purchase seats on the new entrant.

By:  ACA, Edward Faberman, 202.639.7502

Computer Reservations System (CRS) Regulations

Counsel:  Sabre and Winthrop Stimson, Kenneth Quinn, quinnk@winstim.com

Computer Reservations System (CRS) Regulations

However, just as the Internet has been a positive force for change in the sale of airline tickets, it has also opened the door to potential abuse, by offering new ways for airlines to stifle competition and harm consumers through concerted action . This "dark side" of Internet ticket sales is illustrated by Orbitz, a joint venture owned by five of the nation's largest airlines. The overwhelming majority of the comments filed in this proceeding recognize this concern. Only Orbitz and its owner airlines argue that there should be no regulation of their venture, while a wide variety of other parties -  including airlines not affiliated with Orbitz, CRS's, travel agents, independent Internet sites, the American Antitrust Institute and consumer groups - all advocate some form of regulation of Orbitz and other distribution ventures that are under collective airline ownership or control.

Counsel:  Southwest, Robert Kneisley, 202.682.4534, bob.kneisley@wnco.com 

Computer Reservations System (CRS) Regulations

Counsel:  Consumer Alliance, Don Rounds

Computer Reservations System (CRS) Regulations

Counsel:  Travelocity.Com, Andrew Steinberg, 817.785.8108, andy@travelocity.com 

Counsel:  Bruce Cunningham, 281.367.0111, brucecunningham@prodigy.net 

Computer Reservations System (CRS) Regulations

Counsel:  Donald Pevsner

Computer Reservations System (CRS) Regulations

The Orbitz proponents contend that these anti-competitive concerns would be offset by benefits to consumers from lower costs and improved service. We are not so sure. Why would participants in the Orbitz scheme have an incentive to minimize costs, when they all would face the same costs? Why would they pass any cost savings on to consumers, instead of retaining them as profit? What precisely are the advantages of the promised technological improvements over existing systems? And what is it about those advantages that necessitates joint ownership of a ticketing distribution system?

In sum, we believe that Orbitz presents a number of new and serious issues that go well beyond whether DOT's existing CRS rules should be extended to an internet site operated jointly by the airlines. The claimed benefits from Orbitz seem too slight, in and of themselves and in relation to the present range of services available in the marketplace, to compensate for what may be the scheme's inherent dampening of competition among its participants and from alternate channels of distribution. We look forward to working with DOT and the Department of Justice as our review of Orbitz proceeds.

Counsel:  Attorney Generals Tom Miller, Bill Lockyer, and Eliot Spitzer

Computer Reservations System (CRS) Regulations

As counsel to the Interactive Travel Services Association, we retained the services of Professor Jerry A. Hausman in the Department of Economics at MIT to perform an in-depth analysis of the potential competitive harm, alleged pro-competitive benefits, and overall competitive effect of the continuing launch of Orbitz.

Enclosed for your review and consideration in respect of both the Department's ongoing Orbitz investigation and its computer reservation system rulemakings in the above-referenced dockets, is a copy of Prof. Hausman's paper. We hope that Prof. Hausman's analysis will assist the Department as it reviews such matters.

As we believe the Department is aware, Prof. Hausman is not an airline industry consultant, but one of the most distinguished economics experts in the country, with a Ph.D. from Oxford University, an A.B. from Brown University, and 30 years of academic and industry experience. He has published a multitude of articles and testified before numerous congressional committees, courts, and federal agencies on antitrust, telecommunications, and CRS issues.

Counsel:  Pillsbury Winthrop, Jenneth Quinn, 202.775.9898, kquinn@pillsburywinthrop.com

Computer Reservations System (CRS) Regulations

Counsel:  American Antitrust Institute, Albert Foer

Computer Reservations System (CRS) Regulations

Counsel:  Baker Hostetler, Joanne Young, 202.861.1532

Computer Reservations System Regulations

As a threshold matter, Worldspan urges the Department to maintain a comprehensive approach to its analysis of the issues in this proceeding, consistent with the objectives embodied in the Advance Notice of Proposed Rulemaking in Docket No. OST-97-2881. There is no reason to alter that approach in favor of expedited piecemeal actions on individual issues. There is also no reason - at any point in this or any other proceeding - for the Department to involve itself in the business of CRS rate-making, as America West requests. The Department has, for a variety of compelling reasons, consistently rejected arguments that it should become involved in regulating booking fee levels, beyond the non-discrimination provision set forth in 14 C.F.R. § 255.6(a). The Civil Aeronautics Board took the same position. See Computer Reservation System (CRS) Regulations, Final Rule, Docket No. 47762, 57 Fed. Reg. 43,780, 43,816-17 (Sept. 22, 1992);¹ Carrier-Owned Computer Reservation Systems, Final Rule, Docket No. 41686, 49 Fed. Reg. 32,540, 32,552 (Aug. 15, 1984). The record in this proceeding does not and can not support a deviation from this precedent.

In any event, America West's latest call for governmental intervention relies on serious inaccuracies and errors. Among other specious assertions, America West alleges that its Worldspan per segment booking fees increased by 22 percent in 2001 over 2000 and that, adjusted for volume, its Worldspan booking fees increased by 40.8 percent from 1998 to 2001. Neither of America West's allegations is true. In fact, America West's average cost per booking on Worldspan increased by less than three percent per year from 1995 through the first six months of 2001. Furthermore, America West's average cost per booking on Worldspan has actually declined during the first six months of 2001 compared with 2000. America West's hyperbolic claims about "exorbitant" booking fee increases are just flat wrong.

In January 2001, Worldspan implemented an innovative new pricing plan designed to reward efficiency and produce lower booking fees based on more efficient system utilization by subscribers. The decline in America West's average fees in 2001 suggests that America West is benefiting from Worldspan's plan. Heavy-handed governmental price regulation, such as America West advocates, would almost inevitably stifle such innovation, to the detriment of CRS's, consumers and carriers alike. Indeed, if America West's suggested CPI-based fee structure been in place in 2001, America West's booking fees on Worldspan during the first six months of 2001 would have been higher than they have actually been, according to Worldspan's calculations.

Counsel:  Zuckert Scoutt, Charles Simpson, 202.298.8660

Computer Reservation System Regulations

America West's latest contentions in support of its proposal do not withstand scrutiny. Its claims with respect to the Amadeus booking fee increases it has allegedly sustained are simply not correct; it has experienced only a modest Amadeus booking fee increase during the past year. As America West well knows, the cost-competitive on-line distribution options it has available to it serve as an effective competitive limit on booking fee increases. Moreover, any effort to regulate the level of CRS booking fees necessarily would be costly and complex, strain Department resources and potentially produce significant inefficiencies. As it has in the past, the Department should decline the invitation to regulate the level of booking fees.

Counsel:  Amadeus and Steptoe Johnson, David Coburn, 202.429.8063

Computer Reservations System Regulations

The SRC provided an update on recent increases in booking fees by the CRSs for the Department to consider in connection with America West's pending request for a rule to limit the annual increases in CRS charges. The data revealed that CRSs continued to exercise their market power to raise booking fees in 2001 to the supra-competitive levels described in the SRC. Based on these increases, America West again urged the Department to adopt America West's proposed rule to curb excessive price increases. Today, the survival of many airlines is at risk as traffic falls to unprecedented levels and costs continue to rise. Given the current financial situation facing the industry, it is critically important for the Department to expedite its review of CRS booking fees and issue a proposed rule as requested by America West.

Counsel:  Baker Hostetler, Joanne Young, 202.861.1532

Computer Reservations System Regulations

Northwest understands that many of the issues pending before the Department are complex, and require careful analysis. However, Northwest is concerned that the annual extension of Part 255 has become an easy escape from facing up to the fact that the CRS rules now do more anti-competitive harm than they do pro-competitive good. Northwest urges the Department to bring the pending CRS rulemaking to a conclusion in short order; to sunset the CRS rules if possible; and if not to modify Part 255 so as to fulfill the rules' original purpose of limiting CRS market power, and to take into account the significant continuing changes in the distribution of air transportation.

Counsel:  Northwest, Megan Rae Rosia, 202.842.3193, megan.rosia@nwa.com 

Computer Reservation System (CRS) Regulations

During the period we were a charter associate, Orbitz displayed inaccurate fare information about Vanguard flights, and blamed such inaccuracies on fabricated deficiencies in Vanguard's system, in short, evidencing a hostility toward us that seemed to reflect the attitude of its large­airline owners. Moreover, Orbitz has strong-armed its interpretation of a most-favored nation and in-kind promotion/exclusivity provision in a manner that we believe is not justified by our contractual agreement and is clearly anti-competitive. The cost and burden of litigation has precluded us from pursuing these claims against Orbitz, as well as the fact that Orbitz, through these provisions, may in fact become dominant in the interline ticket agency industry and thereby a critical vendor. We also find it peculiar that Orbitz has denied us the economic benefit of Charter Membership but nevertheless continues to take credit on its website for having Vanguard as a Charter Member.

We have found from firsthand experience that it is hard for a low-fare carrier to do business with Orbitz, but if the federal government continues to do nothing, it may become impossible to do business without Orbitz We urge the Subcommittee to continue being vigilant in reviewing this important matter.

Counsel:  Vanguard Airlines, Robert Rowen

Computer Reservations System (CRS)

In this rulemaking we must decide whether CRS practices still require regulation and, if so, which regulations are necessary, in light of the substantial changes in airline distribution and system ownership since our last reexamination of the rules.  We seek comments on whether some of the rules could be eliminated or modified to create more scope for competitive market forces.  We are in particular asking for comments on proposals to reduce regulations in ways that could give airlines more flexibility in bargaining with the systems.  We are proposing not to adopt regulations covering the sale of airline services through the Internet. 
 
We fully recognize the importance of the on-going changes in airline distribution, particularly the growing importance of the Internet as a vehicle for selling airline tickets.  These developments may make these rules unnecessary in the future.  It may be that the continuing developments in airline distribution have already given airlines additional bargaining leverage with the systems.  Several airlines have argued that the elimination of our mandatory participation rule and the rule barring systems from charging airlines discriminatory fees could enable airlines to bargain for better terms for system participation.  While the record appears to suggest that the systems continue to have market power, it may be that the airlines would have some ability to obtain better participation terms through bargaining.  We are therefore seeking comments on proposals to eliminate the mandatory participation rule and to end the rule against discriminatory booking fees. 
 
At this time, it seems necessary to maintain at least some rules to prevent practices by firms with apparent market power that would reduce competition and the adoption of alternatives to the systems.  We are therefore seeking comment on a tentative proposal to maintain some of the CRS rules and to apply them to all systems, whether or not owned or controlled by airlines.  Despite important changes in the industry, there is evidence that each of the systems continues to have market power against most airlines that could be used to distort airline competition and competition in the business of electronically providing airline information and booking capabilities to travel agents.  The systems also still appear to have the ability to engage in practices that would mislead travel agents and their customers about the availability, price, and quality of airline service options. 

By: Norman Mineta

Computer Reservations System

The Department's rules governing airline computer reservations systems (``CRSs'' or ``systems'') obligate the Department to revisit the need for CRS rules. The Department initiated this proceeding to examine whether its existing CRS rules were still necessary and, if so, whether they should be modified. The Department believes that it may be possible to eliminate some of the rules in ways that may promote competition in the CRS business and that rules regulating the sale of airline service over the Internet appear unnecessary. The Department thus is asking for comments on proposals to reduce its regulations in ways that could give airlines more flexibility in bargaining with the systems. The Department tentatively is proposing to maintain some but not all of the existing rules. The Department is also proposing to review its Statements of General Policy to clarify the requirements for the disclosure of service fees by travel agencies. DATES: Comments must be submitted by January 14, 2003. Reply comments must be submitted by February 13, 2003.

By: Thomas Ray

Computer Reservations System

Pursuant to the "good cause" standard in the Department's rules of practice at 14 CFR § 302.9, Petitioners, consisting of three Computer Reservations Systems (Amadeus Global Travel Distribution, S.A.; Galileo International L.L.C. and Sabre, Inc.); Interactive Travel Services Association; American Society of Travel Agents, Inc.; National Business Travel Association; National Consumers League; Navigant International, Inc.; Rosenbluth International; Tzell Travel: Maritz TQ3; Colwick Travel; Protravel International; Austin Travel; Corporate Travel Planners; Altour International; WorldTravel BTI; Compass Travel, LLC and Sea Gate Travel Group LLC hereby request that the Department extend the due dates from January 14, 2003 to March 16. 2003 for initial comments on its November 15, 2002 Notice of Proposed Rulemaking in this proceeding, and from February 13, 2003 to May 15, 2003 for reply comments. In effect, Petitioners seek a 120 day initial comment period in place of the 60 day period contemplated in the NPRM, followed by a 60 day period, in lieu of a 30 day period, for replies. Petitioners also hereby request that the Department extend the sunset period set forth in 14 CFR § 255.12 of the current CRS rules from March 31, 2003 to September 30, 2003. Such an extension would accommodate the comment period extension requested here and remove uncertainty among travel distribution businesses regarding the governing rules that will apply while the Department considers the numerous comments that it will undoubtedly receive in response to its NPRM.  Petitioners also request that the Department act on this Petition no later than December 3, 2002 in order that they may know as soon as possible what deadlines they must plan to meet in this critically important proceeding.

Counsel: Sabre, David Schwarte et al.

Computer Reservation System Regulations

Continental urges the Department to reject summarily the attempt by the world's largest computer reservations systems to prolong the status quo by seeking extension of both the comment periods in the long-pending rulemaking and the sunset date of the current outdated rules. The public interest demands expedited completion of the five-year old CRS rulemaking, and extending either the comment periods or the sunset date would defeat that goal.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

Northwest Airlines, Inc. strenuously opposes the Petition filed by the world’s three largest computer reservations systems, and others, to double the comment periods in this proceeding and to delay sunset of the existing CRS rules for the sixth time since 1997. Any further delay of this long-overdue rulemaking would be inconsistent with Secretary Mineta’s commitment to make “completion of this rulemaking proceeding a departmental priority.” The Department should deny the Petitioners’ extension requests.

Counsel:  Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com

Orbitz opposes the requested extension. The request is not really about an extension of time to facilitate extensive pleading. It is about a desire to preserve the regulatory status quo for ­as long as possible to the detriment of consumers. travel agents and airlines. The Department. in conformity with its own efforts to move this rulemaking forward and thereby to put in place CRS Rules that will better serve the public and the interests of competition, should not postpone the public benefits of updating and improving these rules by granting the request.

Counsel:  Orbitz and Zuckert Scoutt, Frank J. Costello, (202) 298-8660

United supports the Department's efforts to finalize this proceeding without further delay. Although United does not agree that interested parties need more time to submit comments, United would not oppose a limited extension of the comment deadlines established in the NPRM. United, however, strongly opposes any extension of the March 31, 2003 sunset date.

Counsel:  United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, brabinovitz@wilmer.com 

Please note that in the above-referenced Petition for Extension, Ms. Rosemarie Christofolo was inadvertently identified as a result of a typographical error as the attorney for "Alteus" International. Ms. Christofolo should have been identified as the attorney for Petitioner Altour International.

Counsel:  Steptoe Johnson, David Coburn

Computer Reservation System

Hereby answers in opposition to the petition of Sabre et al. for a 60 day extension of the period in which to file comments on the Department's Notice of Proposed Rulemaking and an additional 30 day extension of the period for filing reply comments. The requested extensions are excessive and unsupported. The issues raised in the NPRM have been addressed in multiple comments filed by numerous parties in this rulemaking docket and other dockets over the past several years. The parties should not need another set of comment periods totaling six months, as requested by the petitioners, in order to finalize and articulate their positions on these issues. Other than broad assertions about the need for time to review the "voluminous record in this proceeding," the petitioners have offered no support for their significant request.

Counsel: Zuckert Scoutt, Charles Simpson, 202 298-8660

Computer Reservation System

America West is concerned that among other proposed changes the elimination of both the mandatory participation and non-discrimination rules for booking fees could profoundly affect the CRS market. Rather than enhance competition and innovation, these changes could further distort competition by benefiting the largest, dominant carriers to the detriment of smaller, low-fare carriers such as America West. In this connection, it is telling that the answers opposing the relatively short proposed extension of the procedural timetable to accommodate a more careful, comprehensive analysis of the impact of the proposed rules have been filed by large carriers and Orbitz, Inc., the new online travel agency owned entirely by the largest domestic carriers.

Counsel:  America West and Baker Hostetler, Joanne Young, 202-861-1532

The continuing crisis in the airline industry creates an additional urgency to moving forward with the rulemaking in an expedited manner. As recognized by the NPRM, CRS booking fees are not determined by market forces, and have remained an uncontrollable and growing cost. American expects that its CRS booking fees in 2002 will exceed $400 million. The Depart­ment's proposed elimination of the mandatory participation rule and the non-discriminatory pricing rule, among other regulatory reforms, could create needed market pressures on CRS fees.

Counsel:  American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

Computer Reservation System

The Department has issued a notice of proposed rulemaking that proposes to readopt and amend its existing rules governing airline computer reservations systems (CRSs) and to clarify the requirements of its Statements of General Policy on travel agency disclosure of any agency service fees. The Department is now extending the due date for comments and reply comments on this notice of proposed rulemaking to March 16, 2003, and May 15, 2003, from the original dates of January 14 and February 13, 2003.

We have determined that it would be reasonable to give commenters more time for preparing their responses to the advance notice. The issues are complex, and our notice of proposed rulemaking is lengthy. As the petitioners point out, the comment period includes three major holidays. Extending the comment period should help us, by enabling the parties to prepare comments that thoroughly analyze the issues raised by our notice of proposed rulemaking. We will therefore give commenters an additional sixty days for the comments and thirty days for reply comments. These extensions should give them adequate time for preparing responses to our notice and the comments filed by other parties without unduly delaying the completion of this rulemaking. These comment periods will be comparable to those established by us in our last major reexamination of the rules. 56 FR 12586 (March 26, 1991). As a result, we are making the comments due on March 16 instead of January 14, 2003, and the reply comments due on May 15 instead of February 13.

By:  Kirk K. Van Tine

While the Department is finalizing each aspect of the CRS proposal, it should not allow this anti-competitive weapon (Section 255.10(a)) to be aimed at new entrants, and others. If the Department does not act to address the issues that have deterred airline competition, fewer passengers and communities will benefit from competitive fares.