Internet travel company Orbitz issued the following statement by Gary Doernhoefer, Vice President and General Counsel, in response to the…
Internet travel company Orbitz issued the following statement by Gary Doernhoefer, Vice President and General Counsel, in response to the U.S. Department of Transportation’s (DOT) Notice of Public Rulemaking on new proposed Computer Reservation System (CRS) rules:
In proposing changes to the outdated CRS rules, DOT has taken a very positive step that will promote new ompetition in the travel distribution marketplace where it is sorely needed. The agency has retained features of the CRS rules that benefit competition and consumers, such as the ections
of the rule that limit display bias on CRSs, while liminating or avoiding
those features that work against competition and consumers. Most importantly, DOT has not proposed extending the CRS rules to the Internet, and has proposed elimination of a highly anti-competitive section known as the Mandatory Participation rule.
The agency clearly recognizes that the Internet has benefited travel distribution by increasing competition and improving offerings for consumers and travel suppliers. Current CRS rules would be an unnecessary and inappropriate regulatory intrusion on the Internet. DOT saw past the
parochial interests of entrenched players and proposed updated CRS rules that are more appropriate for the Internet age.
Twenty years ago, the CRS rules were designed to address specific monopoly problems in the offline CRS business. DOT rightly recognizes that those problems do not exist in online travel and in fact could be alleviated by
new entrants, if existing regulatory barriers were removed. Additionally, the department recognizes that regulations written for antiquated, mainframe computers do not apply to technologies built for the Internet.
Orbitz also commended DOT for taking a bold, and much-needed, step by proposing the removal of the Mandatory Participation rule. The anachronistic Mandatory Participation rule prevented airlines from seeking
discounts and competitive pricing from the CRSs that process airline bookings. Eliminating it will subject the CRS oligopoly to the first true price competition in a decade.
DOT’s proposals help travel agents as well, blocking certain heavy-handed contract terms forced on them by the CRS industry. Specifically, the agency proposes limits on abusive liquidated damages provisions that CRSs impose on
travel agents, and proposes that travel agents be permitted to use CRS- provided computers to access any databases to better serve their customers.
Orbitz plans to submit formal comments to DOT commending the agency for this effort, and is confident that other industry stakeholders will recognize the pro-consumer and pro-competitive benefits of the proposed rulemaking.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
