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Countdown to GDS deregulation in the US
The Department of Transportation in the US will drop most of the rules governing GDSs from the end of January, bringing to an end 19 years of heavy regulation. The move has been applauded by GDSs. Samual Katz, chairman of Cendant Travel Distribution Services Division, which owns Galileo, said: “The DOT’s move is pro-consumer and pro-competition, and comes at a pivotal time for the airline industry.” The DOT says it hopes the decision will have a similar effect as deregulation of the airlines – to increase competition and benefit the consumer. The DOT says it maintained heavy regulation of the industry in the past when the GDSs were owned and operated by airlines and served as virtually the sole source for the booking and sale of airline tickets. Now none of the GDSs are owned by US airline. Most of the rules governing GDSs will be removed on 31 January, with the rest being abolished on 31 July. The two rules remaining during the intervening period are: GDSs cannot bias flight listings in favour of some airlines to the disadvantage of others, and GDSs cannot require an airline to provide it with all fares. In a statement issued by the DOT said: “These two restrictions are being lifted later to give the market adequate time to adjust.” The latter clause does not rule out the contracts whereby airlines offer full access to fares in return for reduced fees, such as Galileo’s Preferred Fares Select scheme. The DOT added that it has not ruled out reintroducing regulation in the future should circumstances change. The decision by the DOT paves the way for a similar move in Europe, where changes to the rules governing GDSs are also being considered.
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