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European agents take legal actions against IATA and IATA member airlines for infringing European competition law

On 18 October ECTAA<.>, the Group of National Travel Agents’ and Tour Operators’ Associations within the EU, and GEBTA

On 18 October ECTAA<.>, the Group of National Travel Agents’ and Tour Operators’ Associations within the EU, and GEBTA, the Guild of European Business Travel Agents, have filed a complaint with the European Commission against IATA and IATA member airlines for infringing European competition law, as provided for in Articles 81 and 82 of the EC Treaty.



ECTAA and GEBTA consider that the IATA regulations contained in the Resolutions 814i and which all IATA accredited agents have to comply with in accordance with the IATA agency contract, constitute agreements and decisions of associations of undertakings prohibited by Article 81 of the EC Treaty and allow IATA and IATA member airlines to abuse their dominant position on the market for the distribution of air transport services, which is an infringement of Article 82 of the EC Treaty.



Said Mr Walter Krombach, President of ECTAA: By developing their direct sales, notably through the internet, the IATA member airlines have become direct competitors of the IATA accredited travel agents. However, the Resolutions 814 create distortions of competition between IATA airlines and their agents, to the detriment of the latter. The Resolutions 814 impose on agents outdated and costly obligations and allow airlines to reduce commissions, without prior notification, to levels that are unsustainable for agents. They also partition the European market for the sale of air transport services, given the fact that agents can only sell fares, which are made available by the airlines in the country in which the agent is established, and this is ultimately penalising the customers, who cannot access the best fares.



The IATA regulations were granted an individual exemption by the European Commission until 20 March 1998, on the basis that, although competition was restricted, it allowed the existence of an improved distribution system of air transport services, for the ultimate benefit of the customers. The individual exemption coming to an end, IATA requested from the Commission the renewal of the individual exemption end of 1997. Taking into consideration the changing market environment, the European Commission strongly advised IATA to enter into discussions with the travel agents, represented by ECTAA and GEBTA, in order to obtain a more balanced contract between them and to ensure a neutral distribution system for the consumer.



These negotiations took place in a number of consultative bodies of IATA, notably the EUROFORUMii and the GCCiii. ECTAA and GEBTA defended the position that the IATA regulations should not only impose obligations but establish a balanced and business-oriented agreement, for the ultimate benefit of the travelling public. By way of this agreement, agents should be given certain rights, for example access to promotional fares available in the Internal Market, the agents’ participation in the IATA decision-making mechanism as well as the right to fair remuneration and to a 90 days notification period for all changes to the remuneration. These negotiations lasted for 4 years without yielding any tangible results.



Said Mr Don Lunn, Chairman of GEBTA as well as Moderator of the EUROFORUM and Member of the GCC: After 4 years of negotiations and despite concrete proposals made by ECTAA and GEBTA, no results at all were obtained, due to the lack of goodwill of a number of airlines to elaborate rules that are compatible with EU legislation.



In light of the failure to reach an acceptable agreement, ECTAA and GEBTA have thus filed a complaint with the European Commission, asking them to acknowledge that IATA’s regulations are incompatible with the European competition law and to request IATA to stop infringing Community legislation.

Theodore Koumelis
Co-Founder & Managing Director - Travel Media Applications | Website

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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