First significant sign of dissent from a major player in travel technology after Travelport CEO Gordon Wilson questioned the relevancy of the GDS Code of Conduct in Europe.
A questionnaire for “stakeholders” – GDSs, other players – to submit their views on the future of the Code was sent out earlier this week, with any changes likely to be made in early-2012.
Until now, only the European Travel Technology Services Association (ETTSA) has talked publicly about the Code, although there is plenty of discussion behind the scenes and within the GDSs that change is needed, although not inevitable.
Speaking during a wide-ranging interview with Tnooz this week, Wilson says the “hefty” code needs to be reviewed as it is “out of date”, not least because of changes within the marketplace around the distribution of airfares and position of GDSs and other players in the ecosystem.
“The EU [European Union] has to decide what it wants to legislate for or regulate,” Wilson says.
Regulatory powers “should be there for [the interests of ] consumers”, he says, but argues that currently around half of air bookings in Europe pass through systems and protocols that are now covered under the Code.
The Code is a valuable process for ensuring the display of prices are uniform and correct, with the consumer benefiting from having access to accurate information on websites and through retail travel agencies – and is a system that Travelport is happy to support.
But with countless metasearch engines, OTAs and others not covered by the code, changes are needed to modernise it “for the benefit of consumers”, he says.
In other words: it’s not fair being part of a regulatory framework when so many others are not.
As previously hinted by ETTSA, other figures in Brussels and some within the GDSs, the so-called curve ball in the story still lingers: can even an organisation such as Google be included in the Code, given that it is almost guaranteed to become more than just a bit-part player in the coming years?
When Wilson reels off a list of types of companies currently not included in the code, which he feels should be considered (metas, OTAs, etc), he nods when when asked if that should also include “a company like Google”.
The difficult job for ETTSA, interestingly, is whether it can now appease its GDS members (such as Wilson’s Travelport) who are looking for changes to the Code, when perhaps some of its other online travel agency members will be less eager to be included in the framework.
Meanwhile, Amadeus says it is working an initial and public response to the questionnaire issued earlier this week.
The argument against regulation or to expand coverage has raged before. In 1997 the debate was made very strongly by Amadeus to the European Commission that the CRS regulations (the formal term for GDS is still listed as CRS by the European Commission) should extend to the then new Online Travel Agencies.
The argument against expanded coverage as advocated by Mr Wilson is spurious. There are two reasons in my opinion that this is the case.
1. There is plenty of regulation that already covers consumer protection. If not then this should be handled separately. GDSs are not consumer services. Despite two of them (Sabre and Travelport owning OTAs and/or Meta based services – it is a separate issue and protected as such. If that protection is not adequate then it must be handled appropriately.
2. If the CRS regulations were expanded to cover OTAs then regulation would be unfairly applied to a single channel. The obvious result would be that there would need to be a standard of care applied to any commercial business offering travel via all channels based on GDS results. This would mean that professional corporate and leisure (human) travel agents would be required to provide completely unbiased information and caveat all their statements accordingly. This would be a totally unwarranted and heavy burden on Travel Agents and drive many of them out of business which depends on their ability to some extent to favour certain vendors over others.
Yes the CRS regulations need to be changed. The resulting oligopoly and unwarranted market power wielded by the GDS companies over users and content providers needs to be examined in great detail. In my opinion the European Commission’s investigation should be expanded not abolished. If there were no abuses or potential abuse of market power then of course regulation would not be necessary. However with only 3 players in Europe who control the marketplace therefore this power needs to be supervised and constantly reviewed.
At the end of the day – the marketplace has to be fair, provide equal access, and protect the stakeholders IE the consumer, the users (travel agents) and the product owners.
If the GDSs can demonstrate that indeed they do provide this level of protection and that they have a built in way of ensuring that – then regulation could be removed.
The US deregulated and the results are mixed. The current contract battles battles there and the US Dept of Justice investigation should cause the European Commission regulators to have pause for thought. Thus the likelihood that the current CRS regulations are here to stay is very high. The scope of the regulation should grow to ensure a fair marketplace because the current scope of regulation is too limited.
Where I will agree with Mr Wilson – is that the original intent of the regulations to ensure fair displays for the user community is not the reason to have regulation in place alone. The role of the Transport Commissioner has to be one of ensuring the basic tenets of European law are applied. This should apply not only to the direct EU marketplace (now covering and applied to all ECAC signatory countries) but in any market where these players operate.
The GDS business is a global one. The EC has taken the lead in providing perhaps a heavy hand to regulation. In this case it is warranted.
Thanks
Timothy