Notes

INDUSTRY NOTE

Business Travel Coalition

15 June 2015

AirChannelChoice.travel

The Business Travel Coalition (BTC), in response to the Lufthansa Group’s (LHG) announced policy to discriminate against the travel agency channel, has formed AirChannelChoice.travel as a broad coalition of global stakeholders to promote travel distribution system choice for travel agencies and their customers. There is no cost to join. Find out more at http://AirChannelChoice.travel.

BACKGROUND
Without consultation with its distributors, or most valuable contract customers, LHG’s recently announced proposal that it would surcharge customers 16 Euros if they purchase a ticket anywhere other than its websites, service centers and airport ticket counters beginning on 1 September 2015 represents a possible abuse of it dominant market position. At a recent industry gathering several airline CEOs publicly supported the LHG gambit and 96 out of 120 airlines polled indicated they would consider following the LHG’s lead.

The policy - announced three months in advance of implementation - should be of concern Germany’s competition authority, the Bundeskartellamt, the European Commission’s DG COMP and the U.S. Department of Justice. In an industry dominated by three antitrust-immunized global alliances, tacit coordination of policies is a real danger for consumers. The LHG’s plans, if implemented as currently proposed, would have negative worldwide implications for the competitive structure of the industry, travel agents and their customers.

LHG claims that the goal of its Distribution Cost Charge (DCC) program is to reduce distribution costs. However, that claim is belied by the fact that the surcharge would not be applied to the two most expensive LHG distribution outlets – its own airport ticket offices and reservation centers.

DCC is an extension of some U.S. and EU carriers’ relentless attacks on price transparency and competition that is all about protecting and increasing revenue. LHG appears to be pursuing a five-part strategy to drive new revenue levels – all generated from consumers and the managed-travel community. (See five-part strategy at http://btcnews.co/1MvOJhh.)

In the process of seeking to extract more revenue from the managed-travel community LHG would, of course, create substantial collateral damage and not just transfer costs, but create new costs within the industry by effectively insisting on its direct-connect strategy for its contracted customers. Examples of consequences regarding increased cost can be found at http://btcnews.co/1MvOJhh.

MISSION AND OBJECTIVES
The mission of AirChannelChoice.travel is to elevate the public-policy discourse regarding airline industry distribution issues and to promote travel distribution system choice for travel agencies and their customers. The objectives are to:
1) ensure that there is a powerful, well-articulated and broadly supported public-policy position regarding the issue of distribution channel discrimination;
2) encourage regulators in the EU and U.S. to pursue timely analysis and action regarding potentially anti-competitive and anti-consumer airline policies and practices in the marketplace for travel distribution services; and
3) educate legislatures and regulators on the benefits of intra channel competition in travel distribution and emerging threats and opportunities with respect to consumer choice and price transparency.
STRATEGY
Leverage BTC’s 20-year successful track record of advocating increased airline competition and distribution system reform as well as its global relationships and credibility with press, government and industry to form a broad and active coalition of stakeholders to ensure airline dominant market positions are not used to harm travel agency competitors and their customers.

MEMBERSHIP BENEFITS AND OBLIGATIONS
Benefits. By lending your name to this long-term initiative you will be helping to ensure open and competitive travel distribution channels. BTC will keep you informed through Industry Updates about a public-policy priority of strategic importance to your organization. You will join and interact with a global community passionate about the benefits of competition and consumer choice.

Obligations. From time to time BTC will ask that you consider joining signatory letters petitioning governments to be resolute in upholding competition, antitrust and consumer protection laws and statutes.

Likewise your input will be sought on distribution system proposals for change and related matters through surveys. Finally, we would hope that you would spread the word about AirChannelChoice.travel with your colleagues in the industry and help build momentum behind this important initiative.

TO JOIN
Please visit http://btcnews.co/1I97aEZ to join this global initiative.