Air Transport World

Changing the rules: US DOT has been evaluating new CRS rules since 1997; the problem is that the marketplace is changing faster than the regulators can write. (Distribution).(computer reservation systems)

US Transportation Secretary Norman Mineta promised months ago that by year end his agency would propose an update of rules regulating computer reservation systems. The original rules governing the CRS industry were developed by the Civil Aeronautics Board and implemented in 1984, shortly before CAB was dissolved. They were revised by the Dept. of Transportation in 1992 and were to have expired or been revised again in 1997. Instead of doing either, DOT has extended the 1992 rules five times.

Several things factored into the department's reluctance to tinker again. One was the desire to see if the private marketplace, especially the Internet, would provide the competition DOT dearly wanted for the four airline-owned CRSs that at their peak handled 85% of ticker sales. If the marker delivered, DOT would feel less pressure to act on numerous complaints. It also wanted to see if airlines would sell their CRSs. The owners' anticompetitive use of them is what provoked regulation in the first place.

Also affecting the agency's thinking were the significant changes in distribution that began in 1995 when carriers started offering e-tickets. Many now are charging for paper rickets to ensure their further decline. The primary benefit of e-tickets is a reduction in accounting and security-related costs for both airlines and travel agents. But they also make it easier for passengers not seeking travel advice to bypass agents and buy directly from suppliers.

In 1995 airlines also starring cutting commissions. In 1996 they launched their online booking sites. As carriers gradually built Internet sales, they continued to reduce commissions. The American Society of Travel Agents reports that the average base commission rate declined from a high of 11.8% in 1994 to 6.24% last year. Last March most airlines eliminated domestic base commissions entirely. …

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