RealTime IT News

Everybody's Flying High

A government-appointed commission set up to look into the wave of change sweeping through the travel business issued its report at long last, and both the travel agents and airline-backed online ticket sales operation Orbitz hailed the results.

In short, the commission, in its own words, concluded that "consumers have benefited greatly from changes in the travel distribution system, particularly the Internet, but many travel agents have been adversely affected."

The commission, formally called the National Commission to Ensure Consumer Information and Choice in the Airline Industry, was created by Congress to take a look-see at the prices and practices of various Web sites, both independent sales sites and those run by the individual airlines, and how they impact the traditional travel business.

The report, issued after several hearings, found that the travel agency industry has been severely affected by the events of the last several years and says more than a third of conventional travel agencies have gone out of business since 1994.

Among the reasons: the elimination of many airline commissions, migration of travel purchasers to the Internet, the airlines' strategy of encouraging travelers to bypass agents, and sharp reductions in travel spending tied to the recession and post-9/11 environment.

The commission found, however, that the decline in travel agents has not had a material effect on consumers because the Internet has given them more access to travel information than they have had before.

And in fact the report follows on the heels of a U.S. Department of Transportation proposal for revisions to the regulations governing the Computer Reservation System (CRS) so that all airlines won't have to participate in all four such systems. The government is also proposing an end to the prohibition on exclusive deals between travel agents and airlines.

Orbitz, backed by a consortium of major airlines, liked what it saw in the commission's report, and issued a statement saying that it "highlights the positive effect the Internet and Orbitz have had in improving the quality and quantity of schedule and fare information available to consumers, and in expanding choice and competition in the business of selling air travel."

"Particularly important is that the commission did not support requiring airlines to sell Web fares through all distribution agents and channels," Orbitz said. "Those who would like the government to block true price competition for distribution services aggressively lobbied for this concept, but the commission correctly recognized that such regulation would harm consumers."

The American Society of Travel Agents (ASTA) also applauded the report and said it confirmed that "survival of independent travel distributors is essential to assist and protect consumers, and that the Internet will not always produce better travel solutions than using a traditional travel agency."

As for Orbitz, the commission did say that the government should consider whether Orbitz should be allowed to maintain contract clauses that allegedly keep airlines from offering Web fares to other agents - the so-called most-favored-nation and marketing incentive clauses.

And the commission urged that the Departments of Justice and Transportation "move forward expeditiously to conclude their (ongoing) investigations" of Orbitz.

The commission also proposed that DOT should be required to report to Congress every two years on distribution issues due to continuing market developments.