The International Air Transport Association's (IATA) decision to file with the U.S. Department of Transportation (DOT) for approval of Resolution 787, or the New Distribution Capability (NDC), met with sharp opposition from the Business Travel Coalition (BTC).
Charging that the NDC was anti-competitive and an unprecedented invasion of consumer privacy, the BTC urged the DOT to consider rejecting IATA’s application unconditionally, suggested that the Department of Justice (DOJ) and the European Union probe the proposed NDC and urged an investigation by U.S. state Attorneys General.
BTC said in it analysis that the DOJ should serve IATA, and its airline members who have been spearheading the NDC scheme, with an investigative demand. This, BTC said, would allow discovery of documentation and compel testimony regarding the purpose and objectives of NDC. BTC said it would also uncover the process by which "horizontal competitors reached a binding agreement on how they would price and sell tickets."
"There is zero doubt that airline CEOs, who have signed onto NDC, will hear from their most valued corporate customers, distribution partners, antitrust enforcers and data-privacy regulators from around the world. NDC is nothing less than an ill-considered public and government-relations nightmare," BTC said.
"There is now a DOT docket open for public comment, which I suspect will draw a substantial number of negative travel industry and consumer comments," Kevin Mitchell, chairman of the BTC said, noting that DOT can approve the IATA filing outright, approve it with conditions or reject it.
"However, because of the potentially far reaching and unprecedented harm to competition, consumers and personal data-privacy rights, NDC will make the years-long ancillary fee debate look like a preparation for a high school competition. IATA is overreaching in the extreme," BTC's Mitchell said.
"The problem the airline industry has decried publicly, and seeks to solve, in its own words is the 'commoditization of airline services' caused by the current system of publicly available and transparent fares, " BTC said, quoting Tony Tyler, Director General of IATA.
“We’ve done a great job of improving efficiency and bringing down costs, but we’ve handed that benefit straight to our customers,” Tyler says. “As soon as someone’s got a cost advantage, instead of charging the same price and making a bit of profit, they use it to undercut their competitors and hand the value straight to passengers or cargo shippers – and you’ve got to ask why? I think one of the reasons is that the way we sell our product forces us to commoditize ourselves," Tyler said.
In BTC's view to solve this problem the most powerful global airlines and alliances have "expressly agreed, facilitated by IATA’s offices, on a brazen new worldwide business model for how to price and sell tickets."
"The goal for NDC is to terminate, by agreement among horizontal competitors, the current transparent model for the pricing of tickets, where fares are published and publicly available for comparison-shopping and purchase - by all consumers on a non-discriminatory basis. To accomplish this goal, airlines would demand consumers’ personal data and put their privacy, security and mobility at risk, " BTC's Mitchell said.
"NDC would require consumers to give up substantial personal information - before being provided offers by airlines. The personal information includes – but is expressly said not to be limited to - name, age, nationality, contact details, frequent flyer numbers, whether the purpose of the trip is business or leisure, prior shopping, purchase and travel history and marital status. This information can be used to extract higher prices from less price-sensitive consumers - such as business travelers," BTC warned.
"Airline CEOs, who may not have been fully informed of the nature and extent of NDC's antitrust, data-privacy, corporate customer and public relations complications," BTC said, urging them to investigate their organizations involvement. BTC's analysis concluded by calling the IATA's NDC a "reckless scheme" and urged airline executives to "reconsider the irrevocable negative consequences " if IATA pursues its policy initiative.
BTC offers extensive background information on IATA's NDC at www.businesstravelcoalition.com