ASTA's consumer-driven case against AA

Mark Pestronk

Q: You are on record as stating that the real purpose of NDC is a tool to circumvent the vendors’ fees that the carriers have for decades resented having to pay to the GDSs (“What NDC is really all about,” March 13.) Last month, ASTA lodged a formal complaint with the DOT asking the department to issue an order requiring American Airlines to restore all its fares to the traditional Edifact channel (i.e., the traditional GDS vendors’ displays). Did ASTA agree that the purpose of NDC was to cut the GDS booking fees?

A: ASTA did not mention GDS booking fees at all, presumably because the level of fees does not present issues of harm to the consumer and because GDS booking fees were left alone when the DOT repealed the GDS regulations in 2004.

Nor does ASTA criticize the NDC concept, as it promised that “travel agents would have access to a wider range of products to offer to their customers.” In concept, it was a good thing that airlines were promising that travel advisors would be able to offer “desired amenities such as extra baggage, seat selection, premium seating, boarding priority, meals, in-flight entertainment and WiFi.”

Instead, in its well-written and carefully researched complaint, ASTA attacks the anti-consumer way in which American eliminated 40% of its fares from the GDSs, dumping NDC on an unprepared industry and leaving most travel advisors to cope with the extremely cumbersome and nearly impossible task of providing good service due to NDC’s gaps and inefficiencies.

ASTA wrote: “American was fully aware of the industry’s lack of readiness to implement its NDC ‘solution’ and the serious harm it would inevitably cause but proceeded anyway simply because its dominant market position permitted it to do so.”

So, why did American create such problems for consumers and advisors?

“We believe American has made a strategic decision to forsake short-term profits to achieve an even stronger, anti-competitive business position long-term, one secured by denying access to fare inventory,” ASTA said. “It inevitably follows that withholding such a substantial portion of its fares from critical independent distribution channels is having, and will continue to have, a serious negative impact on the traveling public, with corporate travel buyers in particular bearing a disproportionate degree of the pain.”

In other words, American wants to strengthen its oligopolistic position by eliminating independent distribution channels. To support its position, ASTA also cites several of the obviously anti-agent rules in American’s Addendum to the ARC Agreement that make it harder for advisors to offer good service, including the new ban on fare-rechecking technology, which ASTA correctly notes is extremely anti-consumer and violative of existing DOT rules.

Near the end of its complaint, ASTA spells out American’s motivation in even starker terms: “It seems fair to conclude that AA no longer has any interest in acting as a partner to travel agencies in air ticket distribution. Rather, by all appearances, American’s true objective is the elimination of the agency distribution channel altogether.” 

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