Travel Tech members are the leaders in independent travel distribution and travel technology infrastructure enabling multiple distribution points for a wide array of travel services. Serving as the technological backbone of global travel, our members are catalysts for increased competition, which benefits the traveling public and promotes economic growth.
Today, approximately half of all air travel is booked through independent (that is, free of airline or other travel provider control) distribution channels. Every second, U.S. travel technology solutions providers process over 50,000 consumer queries, helping millions of Americans search, compare, and book travel options through innovative online travel agents and their airline partners. Because of the absolutely vital role travel intermediaries play in the ability of all Americans to travel, it is imperative that policymakers foster a clear understanding of travel distribution and the impact government action has on our ability to promote a competitive and dynamic travel ecosystem.
The evolution of the travel ecosystem has seen travel technology companies assume an irreplaceable position in the marketplace. Travel Tech members not only provide consumers with the ability to compare the all-in cost of the ever-growing array of travel options, but – in a larger sense – the technology and data-driven solutions developed by travel technologists have helped their many airline, hotel, and travel agency partners grow their businesses, create jobs, and transform the travel experience for millions. The colossal scale and advanced nature of this technology is unmatched in other industries and is vital to the travel – indeed the entire U.S. – economy.
By having a better appreciation for the role of technology in global travel, Congress and regulators can successfully balance the needs for smart regulations and free market growth – ultimately enabling the continued leadership of the U.S. travel industry. Air travel competition and consumer policy should address the core initiatives that support growth in the travel marketplace and bring economic and consumer benefit to all.
In light of these initiatives, Travel Tech offers the following policy recommendations.
A competitive travel marketplace leads to innovation, consumer satisfaction, and economic growth. The air travel marketplace can be uniquely positioned for a resurgence of competition, dynamic opportunity, and consumer benefit. Travel Tech stands ready to work with Congress on initiatives that bring growth through competition.
Open Skies has benefited the travel and tourism economy for decades, and it provides the framework upon which the international travel marketplace can thrive and grow. Any attempts to undo or restrict Open Skies will only have the effect of reducing competition and limiting the potential for the immense, positive economic impact that derives from more international visitors coming to the United States.
A perfect example is Norwegian Air International’s (NAI) application to the U.S. Department of Transportation for authority to provide foreign scheduled and charter air transportation to the United States. Norwegian Air has already proven how a low-cost carrier can positively impact the marketplace by offering consumers attractive choices to desirable destinations on new, state of the art aircraft. Carriers already providing service to those markets must now compete for customers. This is a win for all consumers who will be offered lower cost options. Unfortunately, DOT’s continued delay – now more than one year – of NAI’s application to provide more service to and from the U.S. undercuts the promise of new service and more competition.
Greater numbers of foreign travelers visiting the United States – spending money on American soil – is an obvious benefit to the nation’s economy. In 2013, it is estimated that one American job was created for every 33 international visitors, and the overall travel industry supported one in every nine U.S. jobs.
Congress should resist any limitation to current Open Skies agreements and encourage DOT to approve competition-friendly applications such as the one submitted by Norwegian Air International.
Aviation agreements and restrictions that were established and defined nearly 100 years ago are preventing American consumers today from enjoying a truly competitive domestic air travel market. It has been 22 years since the National Commission to Ensure a Strong Competitive Airline Industry, a joint congressional and administration investigation and study of the financial condition of and competition in the airline industry. Much has changed in the travel and tourism economy since the early 1990s, and the time has come to reexamine the state of competition in the U.S. air travel marketplace.
Travel Tech proposes the establishment of a new national commission to closely study the current competitive landscape in the U.S. domestic air travel market. Some topics that may be explored by the commission include:
These are only a handful of the topics that could be explored by a commission on air competition. Congress, the administration, and the American people would benefit greatly from identifying and understanding the commercial air travel market landscape and whether current policies – some of which have been in place for decades – are sufficient to enhance competition and benefit and protect consumers.
Congress should establish a national commission to examine the lack of competition in the U.S. domestic air travel market, and how it impacts American jobs, local economies and businesses, and U.S. customer satisfaction and choices in air travel.
Integrity in the marketplace means travelers trust airlines and intermediaries to provide them with all the information they need to make informed choices on their travel options based on the total cost of travel. Transparency is the key to bringing integrity to the travel ecosystem. Consumers must be able to easily access all the services available to them when comparing their options. Travel Tech members are the companies that make it possible for consumers to explore, search, compare, and ultimately book travel in the palm of their hands. Policymakers must protect air travel integrity by enhancing marketplace transparency.
The need for increased transparency in ancillary fees – for such options as checked or carry-on luggage, assigned or upgraded seats, and early boarding – is becoming greater as the trend toward unbundling of air travel services advances. As that market evolution takes place, travel technology solutions providers are innovating to meet the needs of their customers and the traveling public.
On ancillary fee transparency, the U.S. Department of Transportation is currently considering requests to provide directions on this issue. Any new rule should further the objectives of promoting transparency, informed choice, and purchasing efficiency for travelers. Under the rule as proposed by DOT, airlines and ticket agents would be required to make ancillary fees for checked bags and seat assignments transparent to the consumer at the point of booking. What is not addressed in the rule is: 1) the need to disclose fees for early boarding; and 2) the requirement that those ancillary fees be transactable (purchasable) at the same time a consumer commits to purchasing a ticket. The only way consumers can truly benefit from having access to these ancillary services is to make them “purchasable” through the independent channels, so that they can lock in the quoted price at the time of booking.
Under DOT’s Passenger Protections II rule released in 2012, airlines are required to disclose most prominently in all their advertising the full price of all mandatory charges the passenger must pay, including the base fare, as well as all other airline-imposed surcharges, such as fuel surcharges, and all government-imposed taxes and fees. This is a pro-consumer rule, and any efforts to diminish these requirements in the new rulemaking should be resisted.
Congress should direct DOT to clarify and enhance in the Passenger Protections III Rulemaking the transparency and transactability of basic ancillary fees for air travel, and, if necessary, amend Sec. 41712 of Title 49 to make the restriction of basic air travel information, by contract or any other means, to third parties an unfair or deceptive practice. If DOT mandates transparency but not transactability, Congress should include language in FAA reauthorization providing for fee transactability. Further, Congress should ensure that the full-fare advertisement requirement of the DOT rule is not overturned or impaired.
Travel Tech companies are the backbone of the U.S. travel infrastructure: creating state-of-the-art airline reservation, scheduling, inventory, and distribution solutions, as well as making it possible for consumers to shop, compare, and book travel options. It is imperative that policymakers re-examine the regulatory burden placed on travel technology providers, other intermediaries, and in turn, the marketplace as a whole.
For example, the 113th Congress passed H.R.5462, limiting per round trip TSA fees to $11.20. The bill stated the new limit “shall apply…on or after the date of the enactment of this Act.” This seemingly simple change in fees, written to be effective immediately, required significant planning and manpower in order to alter and test complex, global, and industry-wide distribution platforms. In short, the timetable was wholly unrealistic.
Congress should allow for an implementation – or “grace” – period of at least 90 days for compliance following the enactment of any new requirement.