08 June 2007: Representatives from various travel industry groups gathered in Brussels this week to urge the European Commission to maintain the current mandatory participation rule for global distribution systems.
The mandatory participation rule goes to the heart of the GDS deregulation debate, since Amadeus is still partially owned by three airlines—Air France, Lufthansa and Iberia.
So long as any airline retains an ownership stake in a GDS—even if it is a minority share—there is a “strong financial incentive to tilt the competitive playing by withholding content and otherwise manipulating system features to weaken the competitive position of alternative GDSs,” the groups warned.
Amadeus has consistently dismissed this view, arguing that it is not in the company’s interest to bias display.
Even if the current mandatory participation rule remains in tact, it does not preclude the airlines from pulling or limiting their inventory in the GDS. Under European regulations, airlines must display equally their inventory in all GDSs, but there is nothing stopping them from pulling their best fares off the GDS in favour of displaying them through a cheaper distribution source.
This week’s meeting also called on the EC to eliminate GDS pricing rules.
In the US, which was deregulated in 2004, GDSs can negotiate freely with the airlines and other suppliers to get access to the best content by offering multiple pricing schemes that are based on market demands and marketing and promoting supplier products through special rates for premium display.
EU rules prohibit such practices and thus inhibit competition. “Smarter regulation, and low-cost airlines and rail companies coming into the GDSs as a consequence of the elimination of the GDS pricing rules and lower GDS segment fees,” the groups said, will bring about an “efficient and competitive marketplace”.