BTC: Airline Merger Would Boost ‘Anti-Competitive’ NDC

The Business Travel Coalition inserted the debate over IATA’s New Distribution Capability into a Congressional inquiry into the proposed American Airlines-US Airways merger.

BTC chairman Kevin Mitchell testified before the House Judiciary Committee’s subcommittee on regulatory reform, commercial and antitrust law that the merger would make it easier for IATA to bring NDC to fruition.

‘Game over for consumers’
Mitchell called IATA’s distribution plan an “anti-consumer, anti-competitive model.”

He added that “once NDC is established here in the world’s largest aviation market, it’s lights out, game over for consumers.”

In oral and written testimony, Mitchell said NDC is a new business model designed to “terminate by agreement among airline competitors the current market-driven and transparent model for the pricing and sale of tickets.”

Opacity
He said participating airlines would no longer file their fares with ATPCO, thereby eliminating the ability to compare prices. The new system would create complete opacity, he said.

IATA’s NDC project aims to enable airlines to create personalized offers for travel shoppers based on demographic information, loyalty status, history with the airline and other factors.

The project itself does not build any technology or establish commercial terms. Rather, it is developing XML schemas so that any airline adopting such a distribution strategy would have technical standards to follow.

Testimony contradicts IATA
Mitchell’s testimony directly contradicted the “frequently asked questions” section about NDC on IATA’s website.

For example, he stated that “this new business model is an agreement that is binding on all of the roughly 240 IATA-member airlines worldwide” that wish to sell “enhanced content” or ancillary services.

But IATA’s FAQ answers the question, “Does the NDC standard make the implementation of NDC mandatory?” like this: “No. Each individual carrier decides whether to implement NDC.”

Personal info not required
Mitchell said Resolution 787, by which IATA members approved the NDC project, “codifies that airlines have agreed they have the right to demand from consumers, before they would be privileged to receive a fare quote, personal information including name, age, nationality, contact details, frequent flyer numbers, purpose of trip (business or leisure), prior shopping, purchase and travel history and marital status.”

IATA’s FAQ addresses the issue with the question: “Will travelers have to provide personal information in order to purchase tickets through the NDC?”

IATA’s answer? “No. Travelers will have a choice. Personal details provided by the traveler in the shopping process will enable the airline to personalize the product offered and to make the offer more relevant. Providing these details is not mandatory for the traveler.”

Mitchell’s accusation of attempted collusion by competing airlines is similar to the counterclaim filed by Sabre in the antitrust lawsuit brought against the GDS company by US Airways.

Opposing viewpoint
Aviation consultant Robert W. Mann Jr. disagreed with Mitchell’s assessment of the effects of NDC.

“It’s not in any carrier’s interests to make everything opaque,” he said. “It’s their decision what intermediaries they use or don’t use, but they get benefits from ATPCO.”

Among the benefits is ATPCO’s huge database, which enables airlines’ revenue management and revenue integrity. “If they were to lose that, they would have to reinvent it,” Mann said.