The European Commission asked for public comment on whether the Code of Conduct for Computerized Reservation Systems, first established in 1989, should be revised or abolished.

The EC noted that since the last change to the Code of Conduct, most airlines have divested their holdings in GDSs. Of the four major GDS companies, only Amadeus still has some airline ownership: Air France/KLM owns 23.2%, and Lufthansa and Iberia each own 11.6%.

Meanwhile, the EC said, "alternative distribution channels are gaining ground, mainly due to the development of direct Internet sales."

Internet penetration is likely to increase, it said.

In addition, some of the larger travel agencies in the U.S. have established direct links to airlines that bypass GDSs.

While the "GDS new entrants" have yet to establish a significant foothold in the market, they "at least contributed to pushing the traditional CRSs in adapting and modernizing their tools," the EC said.

The EC also pointed out that the U.S. opted for total deregulation of the GDS industry, while Canada "opted for a partial but still far-reaching deregulation."

Market evolution in the U.S. has led to a reduction of airline booking fees, so U.S. carriers have lower distribution costs than their European counterparts, the EC said.

"Although the introduction of per-segment charges on the travel agents indicates a transfer of the booking costs from the airlines to the travel agents, we do not have evidence whether the full costs have been passed on," the EC added.

In light of these developments, the EC asked whether general competition rules are a sufficient remedy or deterrent to the abuse of market power.

Among the other questions asked by the EC are:

  • Would the air transport distribution market, including small and medium-sized companies involved in the market, be ready for the introduction of greater pricing freedom, such as through the removal of the rules of non-discriminatory fees?
  • Given the changes in the market and in the ownership and control structures of the GDS providers, are the specific obligations imposed on parent carriers still needed?
  • Should there be rules that restrict the possibility for airlines or other sectors to control GDSs?

The full text of the "Consultation paper on the possible revision of Regulation 2299/89 on a Code of Conduct for computerised reservation systems" can be found on the Commission's Web site, ec.europa.eu.

Responses should be submitted by April 27.

They can be sent via e-mail to tren-consultation-crs@ec.europa.eu or by regular mail to European Commission, Directorate-General for Energy and Transport, Office DM24 5/98, B-1049 Brussels, Belgium.