The global airline representative body was informed by the European Commission on November 25 (but details and confirmation have only emerged this week) that it had breached the CRS Code of Conduct and all European travel agent data must be removed from the PaxIS tool.

PaxIS is a product developed by IATA to provide airline passenger market intelligence and real-time data, covering ticket information on over 400 airlines and captured using the the Billing and Settlement Plan (BSP).

Included in the data is passenger and ticket information from agencies such as fare value, point of origin, connection and destination airport, category or class or seat, etc.

The system, however, rivals the existing MIDT (Marketing Information Data Transfer) platform used by the GDSs, a tool which essentially does the same thing, allowing for in-depth forecasting, planning and revenue management and, once again, uses data from agents.

But herein lies the problem and source of the latest shenanigans.

MIDT, by virtue of it being run by the GDSs, has always come under the auspices of the European Code of Conduct which regulates the role and operations of Amadeus, Travelport and Sabre. This meant that agencies needed to give the GDSs permission to use the data within the system.

IATA did not have to ask permission when it launched PaxIS, namely because it isn’t a GDS and is using the data from within its own BSP system.

The European Commission has now decided otherwise.

The latest twist, however, ends (for the time beging) what has been a two-year investigation by European officials into whether PaxIS (and, by extension, IATA) should be included in the GDS Code of Conduct, a probe which started in June 2009 when the GDS formed a joint complaint, with an additional complaint from some agencies in September 2009.

Following the EC decision in November, IATA has been told to remove data relating to all passengers from European travel agents.

IATA still claims the volume of tickets in the PaxIS database will not be reduced and geographical identification of European ticket sales will remain in the system. The detailed passenger information will be out.

An official says:

“We continue to believe that the European CRS Code of Conduct should not apply to IATA (a trade association) or to its PaxIS product (which derives its data through the BSP system).

“IATA is now working with the European Commission to clarify IATA’s views. Obviously, IATA will comply with all regulations in the jurisdictions within which it operates. IATA is acting in good faith  and currently exploring what  steps need to be taken  for compliance in the short-term.

“In the longer-term we are looking to solutions that will allow PaxIS to be restored to its full capability.”

And, perhaps, most telling:

“IATA remains committed to providing a competitive option to MIDT data so that the market for such products is not monopolized by GDSs.”

Squabbles between IATA and the GDSs over PaxIS are not exclusive to Europe, with Sabre and IATA locking horns in the courts in recent years and Amadeus appearing before an International Chamber of Commerce tribunal and successfully extracting its own ticketing data from PaxIS.

The European Code of Conduct element to the wider PaxIS story comes as European officials debate whether to overhaul the Code of Conduct in 2012.

The GDSs have so far declined to comment.

NB: Image via Shutterstock.

The European low cost carrier has spent the best part of the last 18 months discussing and testing its so-called AVOID (Airborne Volcanic Identifier and Detector) technology, a system fitted to aircraft to find minute ash particles at altitude.

EasyJet’s motivation came after the chaos caused to flight schedules when an Icelandic volcano spewed dangerous ash across large swathes of Europe in April 2010.

Here is a clip on the BBC this week about the technology currently being tested over Sicily:

But despite the ongoing tests and pleas to the European Union for support, some are wondering whether the technology can ever have the desired impact on the industry.

The Institution of Mechanical Engineers in the UK says the AVOID technology will only be useful “as long as it is rolled out widely”, a potential problem given that no other airline has supported the testing programme or said it will adopt the system at a later date.

Director of engineering Dr Colin Brown says the wider ash cloud detection programme needs further data and improvements to techniques currently used to measure and detect volcanic ash.

AVOID is “not a panacea”, Brown says, “it does not improve the tolerance of the aircraft to ash. It just tells us where not to go.”

“There also need to be further tests to ensure that the technology is accurate and sensitive enough to detect a variety of different ashes, in different weather conditions and at a variety of different densities.

“We need further tests to ensure the technique would be able to detect what are microscopic particles – comparable to detecting a postage stamp in an area the size of a football pitch from 100 kilometres away.”

Brown also questions whether the technology can be truly effective operationally.

He says:

“Finally, we mustn’t forget that while this technology might be able to detect ash clouds, pilots always fly aeroplanes in controlled airspace, and hence the opportunity to change course at short notice may be very limited.”

Sources in Brussels close to the Commission say the “substantive delay” to the review of the GDS Code of Conduct has come about while a London-based transportation consultancy, Steer Davies Gleave, hired to produce a consolidated document containing feedback, prepares to submit its paper at the end of November.

The paper is expected to give a number of policy options and recommendations.

The deadline for responses from the GDSs – Sabre, Travelport and Amadeus – and other so-called stakeholders was originally set for early-September but was later extended for a number of weeks.

There is a growing feeling in Brussels that the original timeline for the review (with smaller changes expected to be made and possibly introduced into legislation by March 2012) was clearly far too ambitious.

A more fundamental change to the framework, which some have now called for, will probably push the date back even further into 2012.

In August this year, Travelport was the first of the main stakeholders to publicly state the need for a change to the Code of Conduct, questioning the relevancy of the “hefty” framework as the marketplace evolves, the role of the GDS changes, and the entrance of new players on the scene.

CEO Gordon Wilson maintained that the Code is a valuable tool for the display and distribution of airfares and should be modernised “for the benefit of consumers”, but questions whether in its current guise it is fair for other organisations not be included.

A month later, Amadeus joined in, welcoming the review but also stating that the regulations should “maintain a neutral and level regulatory playing field for all travel industry participants “not only GDSs”.

Amadeus is the second of the three big GDSs to come out and call for a change to the regulatory framework in Europe, a process which in its current form does not oversee any online travel agencies, metasearch engines or other intermediaries.

The European Commission sent a questionnaire to “stakeholders” in early August this year to gather information ahead of a formal review of the Code.

Days after the survey was published, Travelport president and CEO Gordon Wilson questioned the relevancy of the “out of date” and “hefty” Code, arguing that a level playing field is needed to protect consumers booking roughly half of air bookings in Europe that do not pass through a GDS.

The Code is a valuable process for ensuring the display of prices are uniform and correct, Wilson argues, 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.

Now Amadeus has taken its stance, albeit in slightly more guarded language.

Welcoming the current review, an Amadeus official says it is necessary as the air ticket distribution marketplace has “changed significantly and seen other relevant developments” in the years since the Code was last updated in 2008.

“Amadeus remains committed to its belief in the benefits that healthy travel intermediary distribution bring to the consumer and that the regulations should maintain a neutral and level regulatory playing field for all travel industry participants (not only GDSs).

“A well regulated market is ultimately in the best interest of all consumers.”

Amadeus says it is will be submitting a detailed response to the review. The deadline has also been extended for a few weeks.

Sabre has yet to disclose its response to the review of the Code.

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 recent discussions about different forms of player in the marketplace (eg. the P2P marketplaces) illustrates that perhaps there is a need to establish a set of rules and processes in order to make a migration from the traditional world of physical interactions into a streamlined, efficient marketplace that is safe.

Trust is earned, as one commenter noted. However the law is very grey across the board. Travel is largely a digital economy. It does some things well but it has a lot of catching up to do in key areas.

As new forms of commerce – particularly social commerce – emerge, we all share a responsibility to ensure that all parties to the transaction operate equitably.

Unlike the laissez-faire attitude of the US, where solutions tend to be “suck it and see” or “wait ’til I’m sued”, the European Commission (EC) is taking a very proactive role in creating what it calls the Single Digital Market.

While this may offend free market capitalists, the so-called digital economy is moving too fast to wait for the law to catch up in normal time.

Understanding the concept is not easy, but the European Commission is determined to make this a reality. It is addressing the whole idea of an information based society through a broad range of initiatives.

These range from social responsibility (rights of access and assisting those who are unable to afford the high costs) through to the creation of appropriate competitive law.

They are also clearly signaling that they want to extend the concept beyond traditional borders by ensuring that for example telecom operators based in Europe don’t gouge customers in non EC markets.

[For the consolidated position on the subject go to the EC website]

Probably the leading standard bearer for the establishment of the SDM is the current EU Commissioner for Competition, the feisty Hollander Neelie Kroes who holds this position through 2014.

Interestingly, among her many initiatives is the creation of a common mobile services area. Something that those of us who travel cannot wait for.

These are not the usual this-is-what-we-will-attempt-to-do type of activities – the EC is to be applauded for taking such a broad range initiative.

It is not perfect, but it is one heck of a lot better than the somewhat limp initiatives announced by successive US administrations that somehow never make it to the market.

So, the European Commission has laid out 21 actions as part of its Single Digital market that carry specific agendas and timelines:

• Simplifying pan-European licensing for online works
• Preserving orphan works and out of print works
• Oblige public bodies to give access to public sector information
• Wide stakeholder debate on further measures to stimulate a European online content market
• Simplifying the distribution of creative content
• Protecting intellectual property rights online
• Fix a date for migration to Single European Payment & eInvoicing
• Revision of the eSignature directive
• Updating the eCommerce Directive
• Member States to implement laws to support the digital single market
• Member States to transpose the VAT Directive
• Review the EU data protection rules
• Complementing the Consumer Rights Directive
• Explore the possibilities for Alternative Dispute Resolution
• Consult the stakeholders on collective redress
• Code of EU online rights
• Stakeholder platform for EU online trustmarks
• Harmonisation of numbering regimes
• Spectrum Policy plan
• Investigate the cost of non-Europe in the telecoms market
• Roaming

One particular action item should be considered broadly which is the creation of a European Trustmark.

The commission is encouraging individuals and organizations – both social and commercial – to become involved, a process which began in June this year.

Travel needs to have stakeholders involved in this process. Travel, as a driver of the digital economy, has shown itself to be less than adequate in policing and advancing the agenda of an open and free digital marketplace.

Unless travel can operate and ensure fairness is handled through cooperation, someone else will take that agenda and manipulate it.

There are some specific ways to get involved throughout the 21 actions. As a consumer, understanding your rights and helping to develop a fair and equitable marketplace which in turn can help power the information society is a must.

The airline says it was originally hoping to test its Airborne Volcanic Identifier and Detector (AVOID) kit in June, by flying through ash spewed out by Mount Etna in Sicily.

But the sudden eruption of the Grimsvotn volcano in Iceland this week, and the inevitable disruption to flights in northern Europe starting to kick in, means EasyJet has an ideal opportunity to carry out further tests.

An official says:

“By flying the equipment close to volcanic ash this will help to further validate the equipment and accelerate its development.”

Away for the latest disruption, EasyJet is still in the middle of looking for other airlines around the Europe and officials at the European Commission in Brussels to support further funding for the technology and deployment on aircraft.

EasyJet is proposing 100 aircraft on the continent are fitted with AVOID (including 20 of its own) to ensure there is a comprehensive coverage of the continent during potential volcanic-triggered crises in the future.

The airline first mooted the idea of AVOID in June 2010.

The official continues:

“This latest eruption validates EasyJet’s recent calls for greater support with the development of new technologies such as AVOID to help limit disruption in European airspace from future volcanic activity.”

A series of projects will begin immediately as part of a wider programme to boost selling of rail travel on the continent by creating standards for fare and availability, ticketing processes and integration with airline systems.

Brussels-based lobbying group European Travel Technology Services Association, representing GDSs and a number of online travel agencies, is expecting to work with the European Commission on the project and is talking up the benefits of implementing such a scheme.

The GDSs will have the ability to distribute rail schedules and fares and combine with air and other travel products, says ETTSA secretary general Tom Parker.

The first project, scheduled to take place between now and the summer of 2011, will see plans for overhauling and creating a common set of rules to determine station identities.

Many currently use variations of existing IATA codes (originally given to airports), but the sheer number of railway stations in Europe means there are simply not enough codes to go round, making point-to-point search and booking on distribution networks extremely difficult.

A hybrid of the IATA codes and a new set is likely to be the result of the first phase, ETTSA says.

The second wave is expected to be a far trickier part of the wider project: coordinating and establishing the common architecture and standards across all of the European rail networks, a process which could eventually lead to wide distribution of fares, availability, fulfilment and routes.

The giants of European rail, SNCF, DB and Trenitalia, are said to be keen to implement such a scheme, but there are many naysayers across the continent, fearful that introduction of such standards will boost the expansion strategies of the larger players into their own territories.

The two groups are already being known as the “believers” and “non-believers” in the project.

Those with relatively long memories will remember the ill-fated RailTeam plan to create a pan-European distribution platform for European rail operators.

Launched in 2007 with a budget of Euro 30 million, RailTeam eventually axed the plan in November 2009, citing costs and a string of complications.

It later emerged that RailTeam hadn’t bothered to talk to any of the external travel technology companies likely to be involved in creating such a service.

The airline first talked about the technology in June 2010 following the massive disruption to European airspace when an Icelandic volcano spewed millions of tonnes of ash across the continent, leading to thousands of cancelled flights and tension between airlines and air traffic control authorities.

The technology, known as AVOID (Airborne Volcanic Object Identifier and Detector), was developed by the Norwegian Institute for Air Research and works in the same way as existing aircraft weather radars, allowing pilots to see ash particles up to 100km ahead and at altitudes between 5,000 and 50,000 feet.

EasyJet says the systems links to controllers on the ground to build an “accurate image of the volcanic ash cloud using real time data”.

“This would open up large areas of airspace that would otherwise be closed during a volcanic eruption, which would benefit passengers by minimising disruption.”

After nine months of development, EasyJet is now looking to other airlines and European officials to support further funding for the technology and deployment on aircraft for testing in real-time volcanic ash areas.

After further testing in the coming months, EasyJet is proposing 100 aircraft on the continent are fitted with AVOID (including 20 of its own) to ensure there is a comprehensive coverage of the continent during potential volcanic-triggered crises in the future.

EasyJet’s call to action comes exactly 12 months after the ash cloud incident and in the same week as European air traffic organisation Eurocontrol carried out a simulation to test new technology for dealing with such another event.

Lobbying groups in the European Union have been hinting for months that the existing GDS Code of Conduct will need to be looked at closely by regulators to reflect what is expected to be a vastly different travel distribution landscape as a result of Google entering the market.

The European Travel Technology and Services Association (ETTSA) is at the centre of such moves in Brussels, home to the European Commission which would investigate such a change of the regulatory framework.

Executive secretary Christophe Klenner says the outcome of the lengthy Department of Justice investigation into the acquisition of ITA Software only deals with the market for fare comparison software, rather than the market for distribution of travel services.

“Therefore, although DoJ’s requests are fair enough, they do not deal with what might be at stake in the longer term.”

ETTSA is pushing ahead with talks with officials at the European Commission to adapt the Code of Conduct to ensure it includes “the changing environment”, Klenner says.

“As the US decision does not deal with the distribution market place, there is little it can contribute to the policy thinking in Europe.”

Klenner has previously said there needs to be a “specific definition for regulation of the GDSs and that definition may have to be changed” with Google potentially becoming a powerful player in travel distribution.

But problems with attempting to force a change in the Code of Conduct still remain.

If Google is forced into the regulatory framework, where does the boundary then start and begin of which travel search companies should be included?

But if Google successfully lobbies against such a move then perhaps the GDSs have a strong case to remove themselves from the code as well.

Nevertheless, with no clear statement as yet as to what Google will do with ITA Software, it is difficult to determine what course of action will follow.

What is beginning to emerge is that there are plenty of organisations ready to pounce and use the might (and delaying power) of the European Commission to either stall, annoy or scrutinise Google as it enters the travel sector in a big way.

It is worth noting that despite a lukewarm acceptance of the deal from Amadeus (more opportunity, it suggests) for it to sell its fare shopping products to suppliers and OTAs), the Madrid-based GDS is one of the founding members of ETTSA (alongside Sabre and Travelport) and could be one of the main influencers in pushing for a change to the Code of Conduct.

Sources in Brussels, home to the European Commission, hinted darkly that Google could face scrutiny from members even if the deal to buy air search and shopping engine ITA Software was passed by Department of Justice officials in the US.

The reason was not one of competition, but regulation.

Officials were said to be concerned that Google’s dominance of search in Europe, coupled with how it may decide to use its prize travel asset, ITA Software, could have a detrimental effect not only on consumers but also the industry.

It is, of course, the same argument that has raged in the US since the moment the deal was announced. But the European ire is different because the EC regulates global distribution systems through a code of conduct – a framework which some suggested Google should belong to if it enters the travel sector in such a major way.

Six months later and the European Travel Technology and Services Association (ETTSA) is starting to drop enough hints that its members may be willing to support a call for such a review of the code.

It makes sense that the group would spearhead such a call, given that some of its members are those directly affected by the code (Amadeus, Travelport and Sabre).

Executive secretary Christoph Klenner is clearly being very careful about what lies ahead, given that no-one truly knows what Google has planned once it gets its hands officially on ITA and that there may not – although it appears unlikely – even be consensus within its own membership (others include Expedia, Ebookers, Opodo, eDreams, OAG and ATPCO).

But this is the first time since the rumours emerged in September last year that ETTSA has spoken publicly about Google potentially being brought in to the GDS code of conduct.

“Unless we have uniformity within the group we will not come out with anything to say,” Klenner says.

But the marketplace could potentially be turned on its head in quite a fundamental way, post-acquisition, meaning that “there is a specific definition for regulation of the GDSs and that definition may have to be changed”.

Klenner admits – as first suggested last year – that any such changes could have far reaching consequences.

If Google is forced into the regulatory framework, where does the boundary then start and begin of which travel search companies should be included?

But if Google successfully lobbies against such a move then perhaps the GDSs have a strong case to remove themselves from the code as well?

As Klenner is keen to stress, with no clear statement of intent from Google as to what it will do with ITA Software, it is difficult to determine what course of action will follow.

But what is beginning to emerge is that there are plenty of organisations ready to pounce and use the might (and delaying power) of the European Commission to either stall, annoy or scrutinise Google as it enters the travel sector in a big way.

The probe follows complaints from a number of price comparison sites including Foundem (which searches for flights, hotels and car hire, as well as other consumer products) over supposed manipulation of search results.

The EC says it is investigating whether Google deliberately lowered the ranking of competing vertical search engines within natural search results.

There will be investigations into sponsored links and its external advertising platforms.

Google is now facing scrutiny by two regulatory authorities after the US Department of Justice launched an inquiry into the proposed $700 million acquisition of air data technology provider ITA Software.

The EC this morning set out its terms of reference for the probe:

• …whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services and by according preferential placement to the results of its own vertical search services in order to shut out competing services.
• …whether Google lowered the “Quality Score” for sponsored links of competing vertical search services.
• …whether Google imposes exclusivity obligations on advertising partners, preventing them from placing certain types of competing ads on their web sites, as well as on computer and software vendors, with the aim of shutting out competing search tools.
• …whether Google restricts the portability of online advertising campaign data to competing online advertising platforms.

Other vertical search firms believed to have triggered the investigation include Ciao (owned by Microsoft) and French legal service EJustice.fr.

The trio filed antitrust complaints over the issue with the European Commission against Google in February 2010.

Google, inevitably, denies the accusations but says it will work the EC during the course of the investigation.

Nevertheless, in many respects this latest investigation will be infinitely trickier for regulators than the Google-ITA acquisition, given that to determine such manipulation of organic search results it may have to get its hands on the secret sauce of the algorithm, something Google has guarded fiercely and will no doubt be reluctant to reveal to outside parties.

The two new European sites – TripAdvisor.com.gr and TripAdvisor.ru – are the first new ones on the continent since a concerted expansion programme in 2008 and 2009.

It brings the number of individual country sites on the TripAdvisor network to 25.

A TripAdvisor official says the next major launch will be for the Indonesian market, probably later in November 2010.

This will be the first significant launch in the region since former-European managing director Marc Charron uprooted from his London base to set up an office for TripAdvisor in Singapore.

TripAdvisor already has country sites for India, Thailand, South Korea and China (under the Daodao brand).

So what did the study discover?

Well, apparently around 20,000 people are employed directly by the three GDSs and online travel agencies across the European Union, with a quarter  in “high-tech”.

This still a fraction (7% in fact) of the number of people employed by offline travel agencies, presumably covering shops and call centres.

PhoCusWright predicts gross online bookings will hit 35% of the total in 2011, measuring Euro 83.6 billion compared to Euro 238 billion for the entire market.

This will be a jump of 2% from the 33% share of gross bookings for online in 2010 (Euro 76.9 billion) and a continued steady track upwards from 21% in 2006.

So what about the GDSs? Between the three major players they currently cover over 550 airlines, more than 90,000 hotels and 30,000 car rental points.

They also process around 254 million transactions a year (according to 2008 figures).

The OTAs account for around Euro 24 billion in total travel sales in 2009 (6% growth year-on-year), compared to offline agencies which bring in Euro 23 billion in just air, hotel and car rental, before packages are taken into account.

But how is this shifting? OTAs in Europe, like those in Asia-Pacific, are growing – the sector has grown by 6% from 2008 to 2009, compared to the total travel market, which has declined by 10%.

This was not mirrored in the US, with the total market dropping 16% and the OTA segment also falling by 3%.

It is the first major travel technology provider to wade into the debate over the $700 million proposed deal for ITA Software.

The response follows recent murmurings over whether Google should be subject to the same regulatory framework as other GDSs in Europe over distribution of air tickets.

While declining to comment specifically on the Department of Justice review of the acquisition in the US, Amadeus says it is still developing a position and will eventually relay it to regulators, if called to do so.

But the situation in Europe is very different from antitrust issues around Google’s dominance in the US marketplace.

The problem Google could potentially face is not around the subject of competition but regulation of its practices if and when the acquisition is completed.

Investigators at the European Commission are said to be concerned that Google’s dominance of the search market in Europe, coupled with how it decides to use the ITA technology, could seriously impact on consumers and their ability to compare air fares.

There are now increasing calls for the Commission to undertake a study as to whether Google should be seen in the same light as other air data firms, namely the global distribution systems.

Amadeus says:

“As Google has publicly stated, online (including search tools) has a potential global reach and we therefore believe that the European Commission will also analyse this transaction.”

Placing Google alongside the GDSs (as it has done so itself with the travel technology ecosystem chart) within a regulatory framework also has the opportunity to trigger other major permutations.

The push to include Google in such a framework is considered by a number of those close to the situation to be primarily a GDS-led drive.

Noises emerging this week from Brussels, home to the European Commission, suggest the search giant could be facing scrutiny from members as to whether a beefing up of its position in travel after acquiring ITA Software needs to trigger a shake up of wider regulatory powers.

The problem Google could potentially face is not around the subject of competition, as its acquisition of ITA and the travel tech company’s client base is predominantly a North American issue.

Investigators at the Commission are beginning to be concerned that Google’s dominance of the search market in Europe, coupled with how it decides to use the ITA technology, could seriously impact on consumers and their ability to compare air fares.

There are now increasing calls for the Commission to undertake a study as to whether Google should be seen in the same light as other air data firms, namely the global distribution systems.

A source who wished to remain unnamed but is well-placed in the regulatory world of Brussels, says:

“In a GDS environment, the display neutrality concept enshrined in the GDS Code of Conduct addresses this issue. If Google is going to provide services that are similar to those of GDSs, then probably safeguards similar to those in the GDS Code of Conduct should be imposed on Google.”

Such a move would be a enormous leap for those that administer the GDS Code of Conduct and how regulation of the distribution of airfare data across the continent is handled.

Placing Google alongside the GDSs (as it has done so itself with the travel technology ecosystem chart) within a regulatory framework also has the opportunity to trigger other major permutations.

The push to include Google in such a framework is considered by a number of those close to the situation to be primarily a GDS-led drive.

But Google could argue that if it is subject to such oversight by regulators then other travel search providers (B2C and B2B) should be included – a prospect likely to keep lobbyists in Brussels tied up for years.

For its part, Google remains focused on the competition element of the deal and will not address the Code of Conduct issue, saying:

“The [ITA] transaction is subject to normal pre-merger notification procedures in the United States only. ITA Software’s European revenues aren’t large enough to warrant European regulatory review.

“We think this combination will benefit travelers as well as those seeking their business, but closer scrutiny has been one consequence of our success, and on that basis we wouldn’t be surprised if there were regulatory review before the deal closes.”

An alternative and radical position could be that if commissioners decide Google is not to be included in the regulatory framework then the same powers should be relaxed for the GDSs as well.

A Travelport official says:

“Given that there are so many factors in relation to the potential Google/ITA acquisition that remain to be resolved and/or announced, it would be inappropriate for Travelport to speculate on these specific questions.”

Sabre declined to comment and Amadeus is discussing internally with its legal team how to respond.

Financial institutions are being blamed in part for the temporary collapse of Travelport’s much lauded road to an IPO, having reacted less than favourably during the investor roadshows in recent weeks.

But it is actually the airline alliances that could actually prove to be the bigger threat to the likes of Travelport, Amadeus and Sabre than the suits of London’s Square Mile, New York’s Wall Street or Madrid.

Little known to the outside world, but quietly over the past 12 months the European Union has started to acknowledge that may possibly be a threat to competition and negotiating power of airlines when it comes to the GDSs.

There is growing speculation – evident among some of the higher profile figures at this week’s Travel Technology Europe event in London – that both the OneWorld and Star collectives are now under intensive scrutiny, as the original remit widens.

Until now it has was only a number of the airlines within the groups that attracted the attention of the European regulators – officially, when the original investigation launched in April 2009, it concerned “certain members”: British Airways, American Airlines and Iberia for OneWorld and United, Continental, Air Canada and Lufthansa for Star.

The investigation initially promised to examine pricing, revenue management and scheduling on transatlantic routes, similar to efforts by the Department of Transportation in the US.

An EU official confirms only what is in the publicly available documents and the commission’s stated objectives.

It is becoming increasingly well known in GDS circles and the lobbying community in Brussels that a significant part of the investigation will focus on how the alliances as a group – rather than as individual airlines – may attempt to squeeze the GDSs at the negotiating table when distribution contracts come up for renewal.

There is growing concern that the alliances will attempt to take over the contracting on behalf of all airlines in their portfolios if anti-trust immunity is passed.

Unsurprisingly, GDSs are worried that their always delicately balanced bargaining hand with an individual airline will be diluted if negotiations are carried out an alliance level.

The European Technology and Travel Services Association, which has online travel agencies and all the GDSs as members, says it is watching the situation closely and will assist with the investigation if called on.

EU officials will not give any indication as to the expected time of the next update from the investigating panel.

But first, some background: two key distribution models are emerging in consumer-facing online travel.

Firstly, there is the distributed transaction model – supplier places product, price and availability information into some form of distribution system, consumer buys from an agent (online or off), the transaction details are transmitted to the supplier.

Secondly, media models are coming to the fore. Awareness of the product (including perhaps price/availability) is on a 3rd party website, but ultimately the consumer books with the supplier directly.

Media models are simply a form of advertising with rich data. It is a marketing process, not a sales process.

With flights, hotels and other commodity products distributed transactions work well.

Most leading OTAs sell flights/hotels and consumers are happy enough to book these products via OTAs.

One reason is that collectively we as an industry have worked out what product information the consumer needs in order to make a purchase decision on a 3rd party website.

For flights/hotels the hot news is the media model websites (including meta search, trip planning sites etc).

For escorted tours, activities and some ground arrangements the story is quite the opposite. Take the example of a customer looking to book a white water rafting holiday.

The consumer will want to communicate with the supplier prior to booking. It is the nature of the product. Hence for these products distributed transaction websites have never really taken off and, I argue, are unlikely to.

Instead of automation tour companies focus on efficiency. You know you are going to have human-to-human contact as part of the sales and booking process – how can that be made efficient?

For these kinds of products the media models are king as ultimately it ensures consumer-to-supplier communication takes place directly.

The hot news is where you see distributed transaction models being given a go.

Trouble ahead

In the UK at least, distributed transactions are a core part of what a travel agent does. In flight/hotel sales the travel agents are competing not only against strong online distributed transaction players but with media model sites that don’t need any complex technology nor any consumer protection mechanisms. Is that fair?

Seems the agents don’t believe so and they want to even up the playing field.

What we may have here is the start of a proxy war between the smaller agents who want to maintain the distributed transaction model and the media model people.

However the media model people haven’t really woken up to it yet (probably because the trade press tend to write from a travel agent perspective!).

The proxy war will be fought within the new Package Travel Directive (a European-wide proposal that is under consultation at the moment).

From an ABTA statement this week:

“The ABTA submission to the European consultation advocates that the scope of customer protection should be extended to include all linked leisure travel arrangements, including “click-through” arrangements bought on the internet.”

Now I am not quite sure what this means yet. Does it mean that if you are a travel website and you have an affiliate banner to sell a hotel – and an affiliate banner to sell a flight – you need to be offering consumer protection?

That would be troubling. It would also be troubling to all non-travel websites who have travel advertisers and, if finally incorporated into the new directive, break the media model at least in Europe.

ABTA asked their members the following question:

If a new Package Travel Directive were introduced, indicate which of the following travel-related products or arrangements you think should be within the scope (tick all that apply).

One of the answers was:

• Accommodation, transport andor other tourist services purchased on the internet from different sites which are clearly linked on their web pages.

105 out of the 141 responses (74%) ticked that this should be in scope.

I am somewhat surprised by this position taken by ABTA. Last year when the ABTA chairman was being elected there was a great discussion on the Musings blog about this very topic. John McEwan (now ABTA chairman) stated:

“My view is that ABTA is best placed to represent the industry as a whole and that should include non transactional companies such as Cheapflights, Google etc. The methods of purchasing travel have evolved and ABTA needs to evolve accordingly.”

The European Union is still accepting responses to the open consultation (until 7th February 2010). Consultation website.

If you believe that websites should be able to link to travel companies without taking responsibility for consumer protection then make your voice heard!

NB: I am taking part in a debate about these two models in tour distribution as part of Travel Technology Europe (London, February 9th 2010). Seminar A1. I will be debating these two models with Deepak Jha from Isango.

In a statement released late this afternoon, officials in Brussels (headquarters of the European Union) said the existing Package Travel Directive would be extended to include dynamically packaged holidays created over the internet.

The original guidelines, created in 1990 and pre the explosion in online travel, did not include “liability for sub-standard services and protection for insolvency” for holidays.

The EU is now looking to include bundled holidays as part of the legislation – a decision it says was accelerated following the spate of recent travel company failures over the past 18 months (such as XL and Zoom).

In a statement, EU consumer commissioner Meglena Kuneva says:

“We need tough protection that gives all consumers booking a package holiday the peace of mind they deserve, and we need a level playing field so businesses compete on equal terms.

“I am particularly concerned about the issue of insolvency. Anyone who saw the TV pictures of thousands of holidaymakers stranded at airports after bankruptcies from Sky Europe to XL, Futura and Zoom, knows that now is the right time to ask tough questions about extending basic insolvency protection to consumers across the board.”

The move follows recent localised challenges to existing package holiday regulations, such as the TravelRepublic vs CAA saga in the UK.

The EU’s decision to take up the baton will be seen by some as a typically late entry into the debate.

Officials today said around 40% of all holidays booked in the EU are package holidays, with around 33% dynamically packaged and 25% classed as other arrangements.

Nevertheless, around 56% of all travel is booked independently and therefore not protected by EU directives in the case of a travel provider going under or airline insolvency.

The EU says it plans to introduce “concrete” proposals to review the Package Travel Directive by the Autumn of 2010. The official consultation process kicks off today and ends in early-February 2010.