ERA calls for change to the current regulation to enable small to medium-sized airlines to compete on the merits of their offer and services.
Airline ticket distribution is twofold: getting the offer to the customer and doing so at the lowest distribution costs. With an evolving market and outdated regulation, this is becoming increasingly difficult for many independent airlines. ERA calls for change to the current regulation to enable small to medium-sized airlines to compete on the merits of their offer and services.
The competitive dynamics of the airline market and the airline ticket distribution market are evolving rapidly and are being increasingly affected by new developments. Traditionally the neutral distribution channel has been powered by travel agencies and global distribution systems (GDS) and for decades, Regulation 80/2009 on the Code of Conduct for Computerised Reservation Systems (CRS) has provided regulations on how airline content should be displayed in the GDS.
Over the last years, however, airline distribution has changed immensely. New channels, such as metasearch engines, aggregators and online travel agencies, have entered the market with new players disregarding the established Code of Conduct, using a biased advertising model. Consequently, the traditional distribution channel has significantly shrunk over the years and now only represents approximately 30 per cent of the total tickets distributed, causing the distribution of airline content to be more costly and complex for small and medium-sized airlines.
Additionally, the aviation market in the EU is going through a process of consolidation as large airline groups grow in size and market power through acquisition or absorption of assets from air carrier bankruptcies. It is estimated that five air carriers currently account for 53 per cent of the total European air traffic, an amount that has grown by 10 per cent over the last nine years. As a result, the capacity for many ERA members to compete in this current context is limited as they do not enjoy the advantages that big airline groups have: negotiating power, economies of scale, brand recognition and the capacity to sell directly.
DG MOVE is currently evaluating the regulation on the Code of Conduct for CRS; this ongoing work paves the way for a potential revision of the regulation.
ERA Director General Montserrat Barriga, says: “ERA fully supports the principles around which the airline distribution market has grown: a level playing field, fair competition and transparency, and these need to be protected. DG MOVE’s revision represents a unique opportunity to ensure that fair competition and consumer choice continues to be protected in the airline distribution marketplace, and that the capacity of European regional airlines to compete is not eroded.”
ERA’s position:
- ERA is in favour of an updated CRS Code of Conduct regulation that applies to all distribution channels and reflects the new competition environment of the airline ticket distribution market. A revised Code of Conduct is a critical instrument for the European Commission to ensure the aviation market remains competitive, thus providing small to medium-sized airlines with the opportunity to compete on the merits of their offer and services with big airline groups.
- In order to ensure a level playing field, similar rules and obligations established in the new Code of Conduct must be applied to all competing players in the airline distribution ticket market including GDS, gatekeepers, airline alliances and groups, metasearch players and others.
- ERA calls on the Commission to establish clear rules and obligations for all market players to correct market failures resulting from advantageous competitive positions such as discriminatory practices.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
