Should Airlines Control Their Fare Information? Regulators Take A Look
Ted Reed, The Street on December 07, 2016
Should airlines be allowed to control the distribution of their pricing information?
It’s a long-simmering debate that now involves the U.S. Transportation Department, which is seeking comments on whether it should regulate what fare information the carriers make available to online travel agency sites, including PRICELINE (PCLN) and EXPEDIA EXPE, as well as to a proliferating category of sites called “metasearch sites,” such as TRIPADVISOR and TRAVELZOO, which search for the lowest airline fares and then direct customers to other sites to book them.
The deadline for comments is Dec. 30, but industry trade association Airlines for America has requested an extension.
The DOT involvement represents progress for the Travel Technology Association, a trade group that represents the travel agency sites and the metasearch engines.
“Our members want to be able to provide for consumers,” said Steve Shur, president of the Travel Technology Association. “We want the airlines to not inhibit or prohibit fare and schedule information, so that websites give a full shopping experience. ”
“It’s public information,” Shur said, noting that the dispute centers mainly on “hyper leisure customers” who strongly motivated to find the cheapest flight available.
Airlines believe they ought to control their own information.
“We continue to believe that airlines, like all other private businesses, have the right to sell their product where and how they choose, and it is inappropriate for the government to interfere in the commercial relationship between airlines and their distribution partners,” said Jean Medina, spokeswoman for industry trade group Airlines for America.
“It is clear that the market is, in fact, providing a solution, and the sooner DOT ends the prospect of a regulatory intervention the sooner the commercial parties seeking that intervention will fully engage in market solutions,” Medina said.
The battle has been going on for a decade. In 2008, AMERICAN Airlines (AAL) sued KAYAK, charging that it enabled customers to book flights on third-party sites. The two parties settled the suit. In 2011, DELTA (DAL) removed its schedule and fare information from more than a dozen sites including TripAdvisor, HIPMUNK and CHEAPOAIR.COM, saying the use of its information was unauthorized.
“Tripadvisor gets information from aggregators shows all the options that are available so you can make informed choices,” Shur said. “But airlines are telling intermediaries who can have access; they are picking and choosing.
“Not seeing a major carrier is a large omission that requires consumers to spend more time shopping,” he said. “When a consumer has to go to the airline website to book, the consumer doesn’t have the ability to comparison shop (and} is likely to pay more. They won’t know a flight exists.”
Delta said it has agreements with online travel agencies that account for about 95% of all online travel agency bookings.
“Delta’s broad distribution policies allow consumers to access Delta products and comparison shop through numerous channels, including online travel agents (OTAs), metasearch sites and global distribution systems in addition to Delta.com.,” the carrier said in a prepared statement issued in October.
However, “some bad actor OTA/metasearch sites have been proven to have misleading, deceptive and/or fraudulent business practices,” said Delta.
SOUTHWEST (LUV) is largely exempt from the dispute. “The only place to book Southwest is at Southwest.com,” Shur said. “Everybody knows that. But they don’t prohibit the display of basic fares and information on these sites. You can see Southwest on search results. It won’t have specific fare information but you will know that a flight exists.”
Shur said it’s unclear what position the incoming Donald Trump administration might have on the dispute. “We’re hoping the Trump administration continues to work on the DOT charter of consumer protection and to address these issues ,” he said.