Worldspan: CRS Deregulation Is Key to Effective Competition and Opportunity for All Travel Distribution Participants
ATLANTA, In comments filed with the U.S. Department of Transportation (DOT), Worldspan said that deregulation of the computer reservations system (CRS) industry would open the door to greater competition and benefits for industry participants. Worldspan's remarks are in response to the DOT's request for industry comments in its Notice of Proposed Rulemaking (NPRM), issued in November 2002.
"CRS rules and regulations cannot fully or accurately account for the dramatic shifts, new distribution channels, and new entrants that have emerged in the travel distribution industry over the past decade," said Paul J. Blackney, president and chief executive officer of Worldspan. "Regulation is inhibiting the industry's ability to innovate and evolve, to produce cost efficiencies, and to move to an environment in which well-managed travel distribution industry participants can grow and thrive. A deregulated industry will provide the greatest opportunity to maximize competition, and thus foster best practices in the industry and the best interests of consumers."
Worldspan is asking the DOT to fully and promptly deregulate the CRS industry, leaving the industry subject only to antitrust, consumer protection, and other generally applicable laws and regulations, as is the practice in most other industries. In its comments to the DOT, Worldspan suggests that the preferred course of action is to allow the CRS rules to terminate as soon as possible and no later than early 2004. Alternatively, the DOT could move toward deregulation via a two-year suspension of the rules, during which time market forces would be allowed to work in the industry. At the end of the two years, the DOT could reinstitute regulations if necessary to correct any anti- competitive practices that may have arisen.
Short of promptly terminating or suspending the rules, Worldspan proposes that the DOT not adopt any new or expanded rules and instead chart an expedited, 12-month transition to deregulation. That process should begin with eliminating provisions clearly harmful to competition, innovation, and growth in the industry including the fee non-discrimination rule and the mandatory participation rule for airlines which own CRSs. Worldspan does not oppose maintaining during the sunset period the DOT rule which prevents screen display bias.
"The airline distribution market is more dynamic than ever, and it continues to change at an accelerating pace," said Blackney. "New distribution models, expanded distribution channels, and revolutionary technologies are altering relationships between CRSs and airlines, between Web sites and airlines, between Web sites and CRSs, and between travel agencies and CRSs. The DOT should not continue to impose a body of regulations on an evolving, dynamic industry particularly since those rules will be obsolete and outdated before they are even adopted."
Worldspan cites its status as the world's largest processor of online travel agency bookings as testament to how innovation and dedication can successfully support competitive, cost-effective alternatives to the traditional CRS distribution model, and how well-managed travel distribution participants can benefit from such innovation. Worldspan argues that through an unregulated market, industry participants can have greater, unencumbered freedom to expand their markets and services, free of rules that stifle innovation and restrict opportunities for growth.
In its comments, Worldspan illustrates how regulations that govern the CRS industry are based on market dynamics that existed when travel distribution technology was in its infancy, nearly 20 years ago. The airline distribution market and the landscape of the entire travel distribution industry have undergone extensive change, the result being that the rules produce inequities and anomalies that themselves cause competitive harm. Worldspan underscores that the circumstances which prompted the adoption of CRS rules in 1984 no longer exist.
Specifically, contrary to the fundamental reasons CRS rules were enacted, U.S. based CRSs either are not owned by airlines or, as is the case with Worldspan, soon no longer will be. Also, airlines do not use CRSs as competitive weapons against each other or against travel agencies, nor do CRSs hold or exercise market power over airlines. Further, there is no evidence that consumers or competition in the air transportation industry are being harmed by CRS-related practices, or that they would be harmed in the absence of the rules.