Magazine article Regulation

Airline Computer Reservation Systems. (Mercatus Reports)

Magazine article Regulation

Airline Computer Reservation Systems. (Mercatus Reports)

Article excerpt

STATUS: Comment period closed June 9, 2003

It has been nearly 20 years since the Civil Aeronautics Board imposed a series of regulations on the then-airline-owned Computer Reservation Systems (CRS). The Board, and subsequently the Department of Transportation, believed that airline ownership of the CRS could confer an unfair competitive advantage to the owner airlines, so it instituted detailed rules to constrain that possibility.

Since their adoption, however, two major changes have obviated whatever rationale may have existed for the rules, and have forced the DOT to consider whether the existing CRS rules are still pertinent. First, airlines have substantially divested them-selves of CRS ownership, and second, Internet-based travel sites have blossomed as alternatives to traditional CRS-based bookings conducted mainly through travel agencies. In response to those changes in the competitive environment, the DOT has proposed a rule that would loosen some of the regulatory requirements on those systems.

From a procedural perspective, it is interesting to note that the DOT considered a full deregulatory option only after the Office of Information and Regulatory Affairs -- the regulatory ombudsman for the White House -- insisted that the DOT include a deregulatory alternative in the proposed rule in addition to proposals that simply modified the existing rules. This forced-inclusion of a deregulation option may help to explain the patchwork approach taken by the Department in the proposed rule.

For example, the DOT has suggested it would like to retain its old rule prohibiting biasing of CRS screen displays in favor of one air carrier over another, despite offering no evidence that a biased display was harmful to consumers. …

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