BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

________________________ _____________ ) Agreement Adopted by the Passenger ) Services Conference of the Inter national ) Docket DOT-OST-2013-0048 Air Transport Association )

________________________ _____________ )

COMMENTS OF US AIRWAYS, INC.

Communication with respect to this document should be sent to:

Howard Kass Vice President, Legal and Government Affairs Benjamin T. Slocum Director, Legal and Government Affairs 1401 H Street NW, Suite 1075 Washington, DC 20005 (202) 326-5162 (phone) (202) 898-2039 (fax) howard.kass@usairways.com benjamin.slocum@usairways.com May 1, 20131 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

________________________ _____________ ) Agreement Adopted by the Passenger ) Services Conference of the Inter national ) Docket DOT-OST-2013-0048 Air Transport Association )

________________________ _____________ )

COMMENTS OF US AIRWAYS, INC. US Airways, Inc. (“US Airways”) fully supports IATA’s reque st that DOT approve IATA Resolution 787. As set forth in an A pplication for Approval dated March 11, 2013, IATA requests that DOT approve Resolution 787 insofar as it describes a means to modernize distribution communications te chnology with a new Extensible Markup Language (XML) data exchange standard. 1 We urge DOT to do so.
No industry is better suited to sell its products via the internet than the airline industry. The product offered is a service between two points and, beyond the base airfare, it is solely up to the passenger how many additional products and services the customer wants to buy. In short, consumers have res ponded positively to these new purchase opportunities by seeking greater c ontrol over their travel experiences and airlines have responded. At US Airways, we have experienced a sizable increase in recent years of bookings made online at us airways.com because we are able to employ XML, which is a richer progr aming language allowing the US Airways website to offer customized offers and products, within the cont ractual limitations of our distribution

1 Application for Approval of an Agreement (Resol ution 787) by the International Air Transport Association. Docket OST-2013-0048. Page 2.2 contracts, to our customers. These gains have come from online travel agencies (OTAs), who serve primarily le isure customers. These cu stomers clearly value having access to all products and services, yet OTAs have been unwilling or unable (via direct connect or the Global Distributio n Systems (GDSs)) to offer such content to customers.
IATA’s efforts to encourage widespr ead adoption of a modern XML data exchange standard would benefit travelers because no matter how a passenger purchased a ticket, the carrier’s complete set of products and services would be accessible through all channels. 2 Detractors of this will paint a horrifying story of doom and gloom that will befall consum ers should this happen. But the reality is just the opposite. Retailers, service-providers, and just about every other organization uses XML to permit consumers to have a better shopping experience on the web---no matter what web outlet, portal, app, mobile site, et c., is used to purchase the product. But the airline industry is lagging woefully behind.
Adopting Resolution 787 would allow airl ine travel to be bought and sold more like other e-commerce products in the 21 st century. In turn, consumers would have a greater ability to receive and compare airlines ’ full product offerings, choosing to receive specifically tailored services or conti nue as an anonymous shopper. An XML standard also should foster investment , innovation, and efficiency in the marketplace by providing certainty around systems and capabilities. Im portantly, an XML standard also could

2 Opponents of IATA Resolution 787 had previously told DOT that the provision of information regarding carriers’ complete product and service offerings to the indirect channel was of primary importance, as it would “support the restoration of comparison-shopping for air travelers.” See, e.g., June 28, 2012- BTC Presentation to U.S. DOT ACAC, available at http://www.businesstravelcoalition.com/pressroom/2012/june-28---btc-presentation.html.3 help foster innovation by, and competition with, GDSs, whic h have significant market power over airlines like US Airways and continue to rely on antiquated technology.
With all of these benefits, one can right ly ask why opponents of Resolution 787, such as the GDSs, are opposing an XM L technology standard so strenuously. Ironically, GDSs have touted many of t he same pro-consumer benefits underlying Resolution 787 to try to advance their intere sts in other rulemakings that perversely would enhance further their ma rket power and commercial inte rests to the detriment of consumers and airlines. 3 The GDSs previously argued th at a mandate which obligates airlines to provide access to content is the only way to ensure full transparency to consumers. Yet Travelocity, a GDS owned OTA, has acce ss to US Airways ancillary content (ChoiceSeats) but has yet to even prioritize the development necessary to consume and display this content to consumers. If it, and its parent GDS (Sabre), were truly interested in consumer transparency, Travelocity would have been the first OTA to distribute US Airways ChoiceSeats. 4
Given the rhetoric and inconsistency of positions, one has to wonder whether consumers interests are rea lly at the heart of the iss ue for these opponents or whether

3 As noted in a joint response filed by US Airway s and several airlines to the Reply Comments of Interactive Travel Service Association In the Matte r of Enhancing Airline Pass enger Protections, Docket OST-2010-0140 at 3, ITSA, “[m]asquerading as a consumer advocate...argues that customers who use travel agents deserve the ‘the same robust and book able fee information as is provided on airline websites.’” Similarly, BTC previously represented th at a “significant consumer issue” existed because carriers’ complete product and service offerings were not available in the i ndirect channel, preventing “apples-to-apples comparisons of air travel options .” Comments of BTC In the Matter of Enhancing Airline Passenger Protecti ons, Docket OST-2010-0140 at 2,4. Resolution 787, which is now opposed by both BTC and the GDSs, would enable the airline indus try to implement the very capability that these parties were previously championing as pro-consumer. 4 The lack of such functionality has significantly reduced the total US Airways revenue booked through Travelocity over the past 3 years.4 their positions are informed more by comme rcial strategy and a desire not to have to compete on the merits and innovate to provide 21 st century services and choices.
We hope DOT sees through the smoke and rhetoric and approves Resolution 787 so that travelers and the greater ai rline industry can benef it from modernized technology standards and the capabilities a nd innovation they would provide.

THE NEED FOR XML STANDARDS
The existing data exchange standards cu rrently managed by IATA for the airline industry have remained largely unchanged for decades. Since the genesis of the existing airline industry data exchange standar ds in the 1960s, the advent and growth of the Internet has produced XML, a simpler, mo re flexible, and more cost effective data format. While XML has become widely used, and is considered the standard for describing and transmitting data over the Inte rnet, it has not replaced the older data exchange standards that continue to be employed by the GDSs.
The adoption of a modern XML data ex change standard as envisioned in Resolution 787 will enable an airli ne, if they so choose, to present more information regarding on-board amenities, ancillary servic es, and customized offerings to customers via indirect channels. Te chnology based on standar ds proposed in Resolution 787, such as the a New Distribution Capability, will essentially bridge the current information gap that exists for customers between the modern direct distribution channels and the indirect channels that rely on antiquated protocols. Re solution 787 thus represents a path toward providing access through the in direct channel to the same types of5 information currently available via the direct channel could increase customers’ ability to compare products and prices across airlines.
It is worthwhile to note that, ironically , the benefits of this kind of comparison shopping is being touted by opponents to Re solution 787 and NDC (namely the GDSs) to attempt to get DOT to propose other rulemakings. Those other rulemakings, perversely, could enhance the GDSs market pow er further to the detriment of airlines and consumers. In our comments in thes e other rulemakings, we questioned whether the GDSs were using these kind of arguments se lectively to try to promote a rulemaking that would further lock-in their commercial inte rests. There is now more evidence that may be the case. The GDSs’ opposition to Resolution 787 and the promise it holds for consumers would seem to demonstrate that the purported pro-consum er justifications for the GDSs positions in other rule makings are not of primary importance. 5
In addition to improving transparency by allowing customers to more readily engage in comparison shopping across airlines in the indirect channel, the proposed XML standard also would provide airlines, if they so choose, with the capability to provide personalized offers to customers in the indirect c hannel. The curr ent protocols managed by IATA for the airline industry display only a few characteristics of an airline’s offer, schedule and base airfare price. Sinc e the implementation of those protocols,

5 Sabre has previously declared that “SABRE’s primary focus was on the travel consumer,” and that “with each booking option” consumers want to see informati on regarding carriers’ complete product and service offerings. Record of the Second Meeting of the Advisory Committee on Aviation Consumer Protection, August 7, 2012. DOT-OST-2012-0087-0106. Howeve r, the GDSs have a long history of engaging in anti-consumer activities when they believe that no one is looking, such as their undisclosed biasing of their displays. See February 1, 2011, DOT letter to several global distribution systems and their association with the subject line Re: Display bias, available at http://www.dot.gov/sites/dot.dev/files/ docs/OTAGDSDisplayBiasWarning.pdf.6 airlines have added on-board amenities and an cillary services that allow for the increased customization of the airline trav el experience. The proposed XML standard would allow airlines more easily to assist customers in the indirect channel with finding amenities and services that those cust omers are most likely to find desirable.
Allowing airline customer s the opportunity to provide information during the shopping process to facilitate more customiz ed offers would facilitate the adoption of practices already widely-employed by leading e-commerce and brick-and-mortar retailers. Leading e-commerce retailers hav e, through trial and error, become skilled at predicting what products are likely to be most desirable to their individual customers. By observing customer purchasing habits and allowing customers to disclose additional information via account registrations, thes e retailers regularly present personalized product offers to their custom ers. Consumers value the ability of these retailers to provide customized offers and regularly choose to disclose information to facilitate the provision of personalized offers that are likely to be rele vant to them. Consumers should have the option of a similarly desir able shopping experience when shopping for airline services.
Because the proposed XML standard coul d enable the aggregat ion of airline product information by indirect distribution channe ls, it may also expedite the efforts of developers to access airline data and build applications allo wing consumers to search for a suite of services they wish to purchase from an airline and compare airline offers. This should spur continued innovation and investment in the marketplace.7 US Airways already is using XML in ternally. The adoption of an XML data exchange standard would facilitate our abilit y to disseminate information regarding product offerings to others. Facilitating the tr ansfer of data in a format that industry participants are already using wo uld allow for a faster, simple r, and more cost effective way to disseminate information regarding airl ines’ full product offerings. For those industry participants that do not wish to m odernize their distri bution communications technology at this time, IATA has indicated that they will continue to support the existing data exchange standards as long as they re main germane to the airline industry.

THE GDS MONOPOLIES’ SELF-SERVING OPPOSITION TO MODERNIZATION
DOT and DOJ have long recognized that the GDSs are monopolies. 6 As the Department is aware, there is also an open DOJ investigation into whether the GDSs are abusing their monopoly powe r in violation of the antit rust laws. Moreover, US Airways has filed a lawsuit against the Sabre GD S for violations of t he antitrust laws. It has been reported that American Airlines recently settled an antitrust lawsuit against Sabre for $ 280 million, in addition to rec ently settling its antit rust litigation with Travelport. 7

One of the traditional harms associated wit h monopolies is relatively lower quality products. The GDS monopolies have achieved a relatively lower quality product, in

6 See, e.g., Computer Reservat ion System Regulations, 69 Fed. Reg. 976, 990 (Jan. 4, 2004); Comments of the Department of Justice to the No tice of Proposed Rulemaking Computer Reservation System Regulations 2 (Sept. 19, 1996).

7 Kevin May, Sabre, American Airlines, and a $28 0 million hand-shake, Tnooz (Jan. 18, 2013) , http://www.tnooz.com/2013/01/18/ne ws/sabre-american-airlines-a nd-a-280-million- hand-shake/8 part, through their failure to adopt moder n XML standards despite its widespread internal use at many of t he GDSs’ airline clients and else where throughout the industry.
Were the DOT to fail to approve Resolu tion 787, it would further perpetuate one of the harms associated with the GDS monopolie s. On the other hand, the adoption of a modern XML data exchange st andard as envisioned in Resolution 787 could help to spur much-needed competition to the GDS monopolies. Such competition would undoubtedly benefit consumers. We would submit that the possibility of competition, however, may be a reason why the GDS industr y groups are lobbying so vociferously against the modernization envisioned in Resolution 787.

CHOICE SEATS
The three major GDSs’ failure to distribute its ChoiceSeats product best illustrates the apathy and disint erest of the GDS channel to ward new airline products and services, even those sought after by t he traveling public. ChoiceSeats gives passengers the option of paying to reserve more favorable seating on a US Airways flight. Unlike competitor airline offerings, ChoiceSeats prices carefully calibrate supply with demand and are thus not determined solely by the duration of a flight. In August 2008, US Airways previewed its plans for rolling out ChoiceSeats outside the 24-hour check-in window to the GDSs. US Airways encouraged the GDSs at that time to begin adapting their systems so that travelers book ing through travel agents could purchase ChoiceSeats just as customers can at usairways.com.9 It didn't happen. Each of the GDSs pus hed back. Citing the uniqueness of US Airways' product, the GDSs refused to modi fy their software and hardware unless and until airlines settled on a single homogenized premium seating prod uct. Unwilling to dumb-down ChoiceSeats, US Airways went forward with development and deployment over its own reservations channels, ultimate ly introducing state-of-the-art service-based technology in July 2010, less than 24 months after development started.
Rather than jumping on the bandwagon, the GDSs tried to squelch US Airways' offering by claiming that US Airways had so mehow violated its cont ractual full-content obligations by making ChoiceSeats available on the direct channel when it couldn't be deployed on the indirect channel. The GDSs ul timately abandoned that position, but the dominant GDS insisted that ChoiceSeats be si mplified so that it could be pushed out using the same decades-old technology used for delivering fares to the GDSs - even though this would have seriously eroded the ut ility of a pricing mechanism designed to more carefully match supply with demand.
Not until March 2011, two and half years af ter US Airways introduced it to the product, did Sabre ultimately agree to make the necessary technology investments to distribute ChoiceSeats as US Airways had in tended. Sabre then took eighteen months to develop a service, deployed in November 2012, that was of limited utility to a majority of Sabre customers. Limi ted adoption among key travel agencies, including Sabreowned Travelocity, has been commonplace, and the resulting lack of access has harmed consumers.10 In most industries, distributors turn cartwheels to satisfy the suppliers on whom they depend. In the ticke t distribution marketplace, the airlines' dependency on members of the GDS oligopoly enables the GDSs to conduct business as they see fit, unconcerned about satisfying those who supply them or the travelers who ultimately consume what they distribute. US Airways’ four year travail to get these essential distributers to offer ChoiceSeats to the tr aveling public speaks volumes for the need to encourage competitive offerings in the i ndirect channel, and providing a standardized XML-based data exchange as a conduit is a vital first step.11 CONCLUSION
The creation of a new, modern, XML data exchange standard to supplement the older data exchange standards al ready managed by IATA will provide the industry with a framework to modernize its distributi on communications technology. Creating standards regarding this optional format will benef it the industry in the same way that past standardization efforts have led to greater efficiencies and increased competition. As such, US Airways fully supports IATA ’s request that DOT appr ove IATA Resolution 787.
Respectfully submitted,

_________________ ____________ Howard Kass Vice President, Legal an d Government Affairs Benjamin T. Slocum Director, Legal and Government Affairs US Airway s, Inc. 1401 H Street, NW, Suite 1075 Washington, DC 20005 (202) 326-5153 howard.kass@usairways.com benjamin.slocum@usairways.com DATED: May 1, 2013