european flags
800 days ago
 

Airline-GDS battles in the US throw new light on European regulatory review

The European Commission has a pending report due on the state of GDS distribution regulation in Europe.

However, events in the distribution marketplace have now overtaken this evaluation. So will the Commission react or will it take a continuing passive role in regulation currently run through its Code of Conduct?

When the European Commission announced a review of the Code of Conduct in 2007, it had a number of options open to it as part of that review.

  • Option 0: status quo
  • Option 1: partial deregulation
  • Option 2: full deregulation (abolition of the Code of Conduct).

After due consideration the commission essentially let the current rules stand, extending status quo. These became the 2009 regulations (formally: Regulation (EC) No 80/2009).

By 2010 however, the commission faced several new factors in the marketplace – particularly the potential entry of Google (through its purchase of ITA Software).

It hired UK firm Steer Davies Gleave to conduct a mid-term evaluation of “Regulation 80/2009 on a code of conduct for computerised reservation systems and repealing Council Regulation 2299/89″.

Whilst the draft report was published to the stakeholders (disclosure: the writer is one of these) in January 2012, it was not released to the public and has been held internally since then. It is now proposed that the report will be issued in the autumn of 2012.

New landscape

Of course, during this time, the GDS marketplace in the US has come under much scrutiny as a direct result of the Department of Justice investigation of Sabre, of the lawsuits surrounding American Airlines (vs Travelport, Sabre and Orbitz), and of the US Airways vs Sabre lawsuit.

In addition, IATA has started a much publicized push to bring openness to the distribution environment, which has affected most airlines, IT providers and distributors.

The recent rulings of the US District Court of North Texas in allowing the re-filed complaints of American, the dismissal of the counter claims and the laying out the rules for the case, have reverberated around regulatory and legal circles on at least two continents.

It should be remembered that the US GDS market has been largely deregulated, yet oversight remains with both the Department of Transportation and the Department of Justice holding some sway in the matters arising from the GDS marketplace.

For Europe, where Amadeus holds significant market share, the rules regarding dominance (effectively any marketplace where a single player has more than 40% counts as having a dominant player) are clearer.

For the twin marketplaces of airline intermediary distribution and airline IT services, Amadeus clearly meets the dominance criteria.

In recent years Amadeus has de-emphasized its other businesses by selling off its interest in OTA Opodo to concentrate on airline distribution and IT services.

The European Commission for Mobility and Transport (under Siim Kallas) has in the past been the formal regulator in these matters.

However, as the size of the players reaches dominant status, jurisdiction now also has to be shared with the EC Competition Commission. In the past only potential mergers have been referred to the Competition Commission. Indeed, Amadeus is listed in seven such cases.

Clearly the EC will need to broaden its scope to look at the impact of the US regulatory investigation and federal and state civil anti-trust lawsuits.

While the Commission has in the past not followed the same lines as the USA, the impact of a controlled marketplace is something they abhor and thus it is highly likely that the whole Commission will be looking hard at the impact of these cases.

Stay tuned, folks. This is a war of which only the first battles have been fought.

NB: European flags image via Shutterstock.

 
 
Timothy O'Neil-Dunne

About the Writer :: Timothy O'Neil-Dunne

Timothy O'Neil-Dunne is a contributing Node to Tnooz and managing partner at travel consultancy firm, T2Impact. He serves as the lead for the airline, aviation and airport practice. He is also a Co-founder of VaultPAD an accelerator devoted exclusively to travel and travel-related startup businesses.

Timothy was a founding management team member of the Expedia team where he headed the ground transportation and international portfolios, before founding T2Impact in 1998.

He has worked in aviation and travel distribution for more than 30 years, including time with Worldspan as head of technology where he managed international technology services from product to infrastructure.

He is also CTO and deputy CEO of Lute Technologies, a permanent advisor to the World Economic Forum and writes on the T2Impact Blog.

 

Comments

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

No one has commented yet. be the first!

 
 

Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel