ITM complains of fare unbundling to EU

18 February 2011
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18 February 2011 | Angeline Albert

The Institute ofTravel & Meetings (ITM) has asked EU officials to investigate moves by airlines to unbundle services, which increase cost and reduce visibility of fare data to business travellers.

CEO of the ITM Paul Tilstone said all airlines are beginning to unbundle – in other words add on extra charges at the end of the process, such as for luggage, taxes and fuel surcharges, rather than giving one overall price.

“They are offering one price at the front-end of the shopping site but this is not the final price, extra charges are added for services. This is not allowing the agent to see the right price at the front end and they cannot properly compare fare data.”

ITM submitted questions to the UK government’s transport committee, which is sending a delegation to Brussels in March to seek responses.

The US-driven National Business Travel Association (NBTA), which changed its name to the Global Business Travel Association (GBTA) on 3 February, forwarded its enquiries on these matters to the ITM in mid-January.

Tilstone, who is also managing director of GBTA Europe, a network of travel managers and travel service providers, said he was also concerned about the impact of ‘direct connect’ technology.

“We want the EU to investigate direct connect technology. Directly connecting to travel management companies (TMCs) gives airlines more control over prices. TMCs have to access global distribution systems (GDSs) and the airline’s system to get a competitive price. This involves more time and investing in workaround technology at more cost.”

The concern is that buyers will pay more if airlines bypass existing global distribution systems (GDSs) – computer systems that book and sell tickets for multiple airlines – and choose to directly connect with customers to sell tickets.

American Airlines (AA) told Tilstone its direct connect system is already in operation with business travel agencies in Spain, Germany and India.

Tilstone said: “In support of GBTA’s overall position on direct connect and unbundling, we have engaged with all three GDSs and with American Airlines directly. When AA advised us they had real-life examples of the technology, we jumped at the chance to investigate further and check what the real implications were for comparative shopping and data collection.”

Clarification is also sought from EU officials on efforts to standardise airport security procedures across Europe. In addition, Tilstone wants the EU to encourage EU member states to better manage taxation for the business travel market, to avoid it being an easy tax target for higher prices.

Tilstone expects to hear the EU’s feedback via the UK government’s transport committee by the end of March.

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