Teeejay
Jan 2, 04, 12:49 am
In Friday's Wall Street Journal:
The Bush administration said it would phase out regulations that have long governed the way most airline tickets are bought and sold, declaring that the rules no longer reflect a marketplace in which consumers increasingly buy their tickets from carriers directly or through online travel sites.
The administration's decision means there will be fewer rules governing competition in the business of selling airline tickets. But for consumers, the impact likely won't be clear for months as the marketplace shakes out.
The decision amounts to a victory for owners of so-called computer reservation systems, such as Sabre Holdings Corp., Southlake, Texas, in competing with the online travel site owned by Orbitz Inc., which was founded by UA and several of the nation's largest carriers and recently went public. System owners, which essentially act as middlemen between airlines and travel agents and take a cut of nearly every airline ticket sold, have argued that the rules are burdensome and anachronistic because they were set during the 1980s, when most computer-reservation systems were owned or partly owned by airlines.
At the time, airlines often programmed the systems to favor their own fares, such as displaying them more prominently when travel agents used them to book flights. The rules prohibited the system owners from favoring one airline over another.
The changes are unfolding amid a broader fight between airlines and travel agents over how much the government should regulate ticket distribution, with both sides claiming to represent consumers' interests. Travel agents and some online travel services, such as Sabre's Travelocity, have argued that Orbitz represents an effort by the carriers to put them out of business and eventually raise fares.
Orbitz and its backers say it benefits consumers by introducing more competition in the business of selling airline tickets. It also allows airlines to cut their costs by allowing them to reach consumers directly.
Late Wednesday, the Transportation Department said the rules "are no longer necessary" given the "dramatic changes that have taken, and continue to take, place" in how airline tickets are bought and sold. The department described the rules as "pre-Internet age" and said that no U.S. carrier currently owns or operates a computer-reservation system. It also said fare shoppers can now choose among independent travel Web sites, air carriers and reservation system-powered Web sites, such as Sabre's Travelocity.
The decision continues a Bush administration deregulatory push in the area of airline-ticket marketing practices. The Justice Department earlier concluded a long-running antitrust investigation of Orbitz, saying it had found no evidence of wrongdoing.
Currently, there are four computer reservation systems operating in the United States. Almost all travel agents have relied on these systems. Because few agents have used more than one system, carriers have had to do business with several system owners to ensure that all travel agents have access to their flight information.
DOT officials said they would lift most of the regulations governing computer-reservation systems on Jan. 31.
A spokeswoman for Chicago-based Orbitz, which has voiced support for maintaining some of the current rules, couldn't be reached to comment. Sabre's senior vice president for government affairs, Bruce Charendoff, called the administration' s move "a victory for consumers and the travel industry," but said that the company was still reviewing details of the announcement.
For full story (subscription required):
http://online.wsj.com/article/0,,SB107300178730125700,00.html?mod=home%5Fwhats%5 Fnews%5Fus
The Bush administration said it would phase out regulations that have long governed the way most airline tickets are bought and sold, declaring that the rules no longer reflect a marketplace in which consumers increasingly buy their tickets from carriers directly or through online travel sites.
The administration's decision means there will be fewer rules governing competition in the business of selling airline tickets. But for consumers, the impact likely won't be clear for months as the marketplace shakes out.
The decision amounts to a victory for owners of so-called computer reservation systems, such as Sabre Holdings Corp., Southlake, Texas, in competing with the online travel site owned by Orbitz Inc., which was founded by UA and several of the nation's largest carriers and recently went public. System owners, which essentially act as middlemen between airlines and travel agents and take a cut of nearly every airline ticket sold, have argued that the rules are burdensome and anachronistic because they were set during the 1980s, when most computer-reservation systems were owned or partly owned by airlines.
At the time, airlines often programmed the systems to favor their own fares, such as displaying them more prominently when travel agents used them to book flights. The rules prohibited the system owners from favoring one airline over another.
The changes are unfolding amid a broader fight between airlines and travel agents over how much the government should regulate ticket distribution, with both sides claiming to represent consumers' interests. Travel agents and some online travel services, such as Sabre's Travelocity, have argued that Orbitz represents an effort by the carriers to put them out of business and eventually raise fares.
Orbitz and its backers say it benefits consumers by introducing more competition in the business of selling airline tickets. It also allows airlines to cut their costs by allowing them to reach consumers directly.
Late Wednesday, the Transportation Department said the rules "are no longer necessary" given the "dramatic changes that have taken, and continue to take, place" in how airline tickets are bought and sold. The department described the rules as "pre-Internet age" and said that no U.S. carrier currently owns or operates a computer-reservation system. It also said fare shoppers can now choose among independent travel Web sites, air carriers and reservation system-powered Web sites, such as Sabre's Travelocity.
The decision continues a Bush administration deregulatory push in the area of airline-ticket marketing practices. The Justice Department earlier concluded a long-running antitrust investigation of Orbitz, saying it had found no evidence of wrongdoing.
Currently, there are four computer reservation systems operating in the United States. Almost all travel agents have relied on these systems. Because few agents have used more than one system, carriers have had to do business with several system owners to ensure that all travel agents have access to their flight information.
DOT officials said they would lift most of the regulations governing computer-reservation systems on Jan. 31.
A spokeswoman for Chicago-based Orbitz, which has voiced support for maintaining some of the current rules, couldn't be reached to comment. Sabre's senior vice president for government affairs, Bruce Charendoff, called the administration' s move "a victory for consumers and the travel industry," but said that the company was still reviewing details of the announcement.
For full story (subscription required):
http://online.wsj.com/article/0,,SB107300178730125700,00.html?mod=home%5Fwhats%5 Fnews%5Fus