Final revisions to the regulations governing global distribution
systems could be ready for federal approval as early as next month,
spurring the American Society of Travel Agents and other industry
groups to plan a lobbying and educational campaign in Washington
After years of extensions and months of heated debate, the
Department of Transportation said it now expects to seek federal
clearance of the proposed changes around Oct. 19, with final
approval to come in mid-January.
Bill Maloney, ASTA’s executive vice president and chief
operating officer, said hopes are that the Thursday event which
will include educational sessions and meetings with members of
Congress will help raise awareness of the issues.
Agents have worried that the changes may eliminate incentives
that airlines provide to some travel agencies.
“The DOT has the power right now to change existing CRS
regulations without any oversight from Congress or the
administration,” Maloney said.
“We think if the proposed rules go into effect they would
severely harm agencies.”
It is estimated that 90 percent of the $57 billion in airline
tickets sold each year by agents are made through GDS systems.
The Transportation Department has said it believes changes are
needed to boost competition in the airline industry, and has
proposed allowing some of the rules to lapse in January.
The regulations originally were designed to prevent
anticompetitive abuses by airlines when they owned the ticket
The Department of Justice has recommended deregulation of the
entire system, saying airlines have largely divested themselves of
direct control so the rules are no longer needed.
Of the four major GDS companies in the U.S. market, Sabre,
Worldspan and Galileo are no longer owned by domestic carriers.
Three foreign carriers continue to be major shareholders in
Use of the Internet also spurred the Justice Depart- ment’s
recommendations; the department said online retailing has reduced
the need for GDS regulation because it has broadened the way
airline tickets are distributed.
Noting the incentive payments to agencies, the U.S. General
Accounting Office said in a recent review: “Very large travel
agencies whose total annual sales have almost doubled since 1995
appear to have benefited from a combination of increasing global
distribution system incentive payments, some continued airline
sales-commission payments and customer service fees.”
The report noted that, while airlines have cut their
distribution costs by more than 25 percent from 1999 to 2002, each
GDS during the same time period paid agencies “an increasing amount
of incentive payments from $22.3 million to $233.4 million (more
than 900 percent).”
Some say that, while incentive payments may have grown, they are
a critical resource for agencies and simply reflect market
“Since commissions have gone to zero, the two major revenue
streams (for agents) are consumer fees that they charge and the
incentive fees that they get from CRS,” said Bruce Charendoff,
Sabre Holding’s senior vice president for government affairs, which
“To outlaw those payments would be very problematic for many
agencies who count on that revenue to keep their doors open,” he
“What you have today is a different marketplace, where the
vertical integration between airlines and CRS systems has been
“You have alternatives to CRS that have appeared in the
marketplace and you have deals being done in the marketplace that
are major benefits to the airlines, CRS, agents and consumers,”
As part of its program, for example, Sabre Travel Network has
given the six largest airlines as well as more than a dozen others
discounts that amount to 12.5 percent and are fixed for three
years, he said.
“The marketplace should devise who the winner and loser is in
the marketplace not government agencies,” he said.
Maloney said the Washington event this week is open to everyone,
not just ASTA members.
“What is required is a grass-roots response by travel agents. We
can’t do this alone.”