New GDS Rules Will Favor Airlines

Jeffrey Miller Looking ahead to 2003, we see the new GDS regulations to be one of the most important issues facing the travel agency community. We believe, however, there will be numerous changes to the proposed regulations prior to any final implementation. While the current regulations were initiall

By: Jeffrey Miller

Looking ahead to 2003, we see the new GDS regulations to be one of the most important issues facing the travel agency community.

We believe, however, there will be numerous changes to the proposed regulations prior to any final implementation. While the current regulations were initially set to expire on Dec. 31, 1997, they have been extended on several occasions by the Department of Transportation. We believe the DOT continued to extend the date in order to avoid addressing issues, such as Internet travel sales, that were not relevant at the time the initial regulations were issued almost a decade ago. We also believe that the final version of the regulations will reflect the primary goals and objectives of the airline industry, despite contrary positions and views from other parties.

As our clients are aware, the airlines presently receive marketing data from the GDS vendors, which is very important to market share analysis. DOT has indicated in their proposed regulations that the data can be anti-competitive to new, low-fare entrants and, thus, the GDS vendors should be prohibited from making that data available to air carriers. We believe that the marketing data will be allowed, in some format, despite DOT’s initial opposition. It is also interesting to note that while various industry segments have conflicting views, there is no distinct consensus as to the final format of the regulations. We continue to believe that a properly negotiated GDS contract is one of the few opportunities for a travel agency to create a win/win situation with a vendor.

While many of our clients have signed three-year agreements, we still have travel agency clients re-signing for five years. One of the most important aspects of GDS negotiation is to make certain there is a significant margin of safety to prevent any shortfall type situations.

>