ASTA filed a complaint with the Department of Justice`s Antitrust Division…
ASTA filed a complaint with the Department of Justice`s Antitrust Division, asking for an immediate investigation into Northwest Airlines` announcement that, effective Sept. 1, 2004, it will begin charging travel agents a fee for bookings made via a Global Distribution System(GDS) for travel within the 50 United States.
In its complaint, the Society accuses Northwest of signaling to competitors to line up behind a commercially dubious policy (which has been roundly condemned by other GDSs, travel agencies and by commercial airline user representatives). Northwest`s announcement on Aug. 24 was met with swift and strong commercial response from Sabre and Galileo. Worldspan condemned Northwest`s policy. Sabre also filed a lawsuit against Northwest for breach of Sabre`s fare-access contract.
If there was ever a question as to what the airline hoped to accomplish by making its announcement a week before the program`s intended implementation date, said Richard M. Copland, CTC, ASTA president and CEO, Northwest quickly dispelled it when the airline termed Sabre`s response as being designed `to prevent Northwest from making these much-needed changes.
[Northwest] apparently expected its commercial partners to sit back and wait for the other airlines to decide whether to follow Northwest during a `time out` consisting of the week before implementation. Sabre did not wait to protect its commercial interests, thereby upsetting Northwest`s signal strength, Copland said.
In an earlier release, ASTA noted that the move would transfer the cost of Northwest`s failed attempts at direct price increases onto travel agents and the consumers who use them.
In its request that the DOJ investigate antitrust violations, the Society wrote:
Northwest no doubt will say, This was no price increase. But look at the realities. The airline has little chance to secure other airline concurrence in a direct price increase. Virtually all recent attempts by the airlines to achieve such an increase have failed … The passing on of GDS booking fees will, however, achieve the same goal by forcing travel agencies to pass the charge on to their customers who are still the vast majority of airline consumers. Northwest knows that travel agencies do not receive base commissions anymore and that their service fees are subject to extreme competitive pressure. Agencies, therefore, cannot simply absorb this cost pass-off and Northwest knows it. The advantage of the pass-off approach, of course, is that as to consumers Northwest will say, We didn`t raise your price-it was those travel agents.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
