Order 2014

- 8

- 1

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Action on IATA Agreement Issued by the Department of Transportation

on the 6 th day of August 2014

Served : August 6 , 2014

Docket OST 20 13

- 0 048

FINAL ORDER

Summary

By Order 2014

- 5

- 7, issued May 21, 2014

, the Department tentatively found that, subject to

cert ain specified conditions

, approval of International Air Transport Association (IATA)

Resolution 787 would be in the public interest. We gave i nterested parties 21 days to file objections and seven business days for answers. Having now reviewed the comment s, we have

decided to finalize our tentative fin din gs and approve Resolution 787 subject to the conditions specified.

Background

On March 11, 2013, IATA filed for approval by the Department under sect ion 41309 of Title 49 of the United States Code (the Code), and Part 303 of the Department’s regulations, an

a greement that adopts Resolution 787 (Enhanced Airline Distribution). The agreement was adopted at the 34 th meeting of the Passenger Services Conference (PCS) in Abu Dhabi, on October 18

- 19, 2012. 1 Resolution 787 establishes a process for developing a technical standard for data exchange i n the air transportation market place using Extensible Markup Language (XML)

. 2 The resolution also establishe s certain goals associated with using the new technical standard, including the capability to provide personalized pricing offers to consumers who shop for air transportation. These goals are called the “New Distribution Capability” (NDC). 3

1 IATA memorandum PCS/Reso/156

. 2 XML is a markup language that defines a set of rules for encoding documents in a format that is both human

readable and machine

- readable

. 3 IATA specifies that it is not seeking approval for the NDC port ion of th is agreement, and nothing in our tentative

decision or in this final order should be interpreted as reflecting any prejudgment or de t erm i n a t ion on our part regarding the NDC. Agreements among Member Carriers

of the International Air Transport

Association concerning an agreement ( Resolution 787 ) of the Passenger

Services Conference- 2

-

Joint Motion

On January 22, 2014, following a substantial n umber of comments on the record, IATA, along with Open Allies for Airfare Transparency representing various sellers of air transportation and distributors of air transportation, including GDSs and agents, who had previously opposed Resolution 787, filed a joint motion urging the Department to approve the resolution subject to several agreed conditions. 4 This joint motion proposed conditions, addressing the main areas of concern raised by opponents, including the scope of the resolution, the use of personal information, the use of data transmission standards, data ownership, and backwards compatibility.

Tentative Decision

By Order 2014

- 5

- 7

, after careful review of the record, including the Joint Motion and the comments filed in response, we tentatively app roved Resolution 787 subject to certain

conditions . We said that tentative approval of IATA’s app lication appe ars warranted because of

our tentative conclusion that the modernized communication standards and protocols and the marketing innovation they cou ld facilitate would be procompetitive and in the public interest, provided that certain safeguards were imposed. We identified those safeguards in the order and in the attached appendix to the order. We gave interested parties 21 days to file objections and seven business days for answer s to objections.

Responsive Pleadings

We received a total of 41 comments and reply comments to Order 2014

- 5

- 7. Most were brief

comments made by individuals

. Two individuals , however

, Edward Hasbrouck and Benjamin

Edelm an, filed m ore ex tensive comments

, and nearly all of the other individuals who filed comments expressed support for the position s they took. We also received comments from the European Travel Agent s ’ and Tour Operat or s’ Association (ECTAA)

, the American A ntitrust

Institute (AAI)

, the Travel Technology Association (Travel Tech)

, and from Open Allies for Airfare Transparency (Open Allies) . IATA filed a consolidated answer to the objections and

comments.

Hasbrouck and Edelman Objections

Edward Hasbrouck st ated that DOT should not approve Resolution 787 because the sale of tickets at personalized prices, as contemplated by the resolution, rather than in accordance with published tariffs, is contrary to the explicit and unambiguous provision s of 49 U.S.C. § 4 1510

, and because DOT’s tentative findings are based on an unsupported misreading of that statu t e, which would render it meaningless

. 5 Benjamin Edelm a n also cited 49 U.S.C. § 41510 and stated that he objects to Order 2014

- 5

- 7 to that extent it would permi t airlines to sell tickets other than

4 DOT

- OST

- 2013

- 0048

- 0412

. 5 DOT

- OST

- 2013

- 0048

- 0416.- 3

-

in accordance with published tariffs. While he stated that he takes “no position on whether DOT should approve Resolution 787,” he asked that the Department “reaffirm carriers’ longstanding obligation to have tariff s and to charge only the fares prov id ed by tariffs.” 6

ECTAA’s Objections

European Travel Agents ’ and Tour Operators’ Association raised a number of concerns regarding customer data, d ata storage and access to customer data and privacy consideratio ns in general. ECTAA recomm end ed that the resolution be adopted as a recommended practice only

, and not binding for IATA members’ airlines and travel agents. ECTAA s tates that the implementation of Resolution 787 will be against the public interest because of numerous privacy issues and will seriously affect competition i n the airline distribution market. 7

AAI’s Comments

American Antitrust Institute does not oppose Order 2014

- 5

- 7 ; however, it express es concern that language i n our order could be misinterp reted as reflecting our approval of certain goals or aspiration s of the NDC , ther e by going beyond our limitation of our approval to the new

communication standard only . AAI recommends that the Departments’ final approval should clearly state that its appr oval is only for the XML standard. 8

Travel Technology Association

Travel Tech supports the Department ’s tentative decision and states that it and its members are committed to working with all stakeholders to ensure that the principles of privacy, compe tition, choice, voluntary participation, and open standards are upheld and maintained in the future of

travel distribution.

Open Allies for Airfare Transparency

Open Allies for Airfare Transparency support s the Department’s Order to Show Cause. Open

Allies states that the Department’s conditions on Resolution 787 are consistent with promoting the important goal that passengers continue to be offered robust, diverse, transparent and competitive air transportation options and that the opportunity for c omparative shop ping by

passenger s be respected. 9

IATA’s Consolidated Answer

On June 20, 2014, IATA filed a consolidated answer to the objections filed in response to Order

2014

- 5

- 7

. 10 IATA state s that the objection s filed in response to Order 2014

- 5

- 7 ra ise concerns only about conduct expressly excluded from the scope of Resolution 787 by condition.

6 DOT

- OST

- 2013

- 0048

- 0417.

7 DOT

- OST

- 2013

- 0048

- 0452

. 8 DOT

- OST

- 2013

- 0048

- 045 6

. 9 DOT

- OST

- 2013

- 0048

- 0454

. 10 DOT

- OST

- 2013

- 0048

- 0457.- 4

-

Whatever the independent merit of those objections , they do not provide grounds for delaying prompt finalization of Order 2014

- 5

- 7. 11

Decision

We have decided to final ize our tentative find ing s and to approve Resolution 787 subject to the terms and conditions specified in Order 2014

- 5

- 7 and attached in the Appendix to this Order. Having reviewed the objection s , we find no persuasive argument that would lead us to adopt a different result. We emphasize that our approval is limited to the creation of an XML

communication s standard and that any future agreement among IATA member airlines regarding business models for the distribution of air transportatio n shall not be implemented without prior compliance with any applicable government approval or notification process.

We note first that Mr. Hasbrouck raised some of the same arguments concerning 49 U.S.C. § 41510 prior to the issuance of our show

- cause order, and we addressed them there. 12 We have seen nothing in his objection that would lead us to alter th o se tentative findings and conclusions. Beyond that, as to both Mr. Hasbrouck and Mr. Edelman and all the other individual filers who

raised tariff i ssues, we again emphasize that approval of Resolution 787 does not constitute approval of any agreements among IATA member airlines regarding any method or business model of distributing air transportation. The conditions also make clear that any future agreement among IATA member airlines regarding business models for the distribution of air transportation shall not be implemented without prior compliance with any applicable government approval or notification process. Thus, the concerns raised are outs ide the scope of the present proceeding, and nothing in our present action is intended to preclude the objecting parties from raising them again as appropriate in subsequent proceedings.

Regarding ECTAA ’s concerns about collection and access to customer data, we note that nothing

in our conditional approval of Resolution 787 authorizes any agreement on data collection. Also, Order 2014

- 5

- 7 requires individual airlines to honor their own and their agents’ privacy policies. Resolution 787 does not restr ict or interfere with the ability of any government to enforce its privacy regulations and policies. In these circumstances, we do not view ECTAA’s

concerns as a basis not to finalize Order 2014

- 5

- 7.

Finally, with regard to comments of AAI, we have alrea dy made clear, both in our show

- cause order and here ( see, e.g ., note 3 supra)

, that the scope of our action goes to approval of the new

XML standard

, but not to approval of the NDC. However, to the extent that further emphasis might prove helpful, we rei terate the point again here and in Condition 1.a) in the attached Appendix.

11 Id

. a t 1

12 Order 2014

- 5

- 7, at 14. For example, we said that “The clause in 49 U.S.C. § 41510 under which carriers are to charge only prices ide ntical to those in the tariff ‘in effect for such transportation’ presumed filing of those tariffs with the Department under § 41504 as part of a comprehensive regulatory regime. Domestic tariff filing was terminated by the Deregulation Act of 1978. With progressive liberalization of international air services, including implementation of over 100 open skies agreements, the Department has, under § 40109(c) and 14 CFR Part 29 3, progressively exempted carriers from filing tariffs in liberalized internationa l markets. Nor does 14 CFR 221 Subpart K still require carriers to post their tariffs for public inspection....” Id. Mr. Edelman raised concerns similar to those raised by Mr. Hasbrouck ; their issues were addressed in the show

cause order as well as with this final order.- 5

-

ACCORDINGLY,

1. We make final our tentative findings

, conclusions

, and decision as set forth in Order

2014

- 5

- 7, and we approve IATA Resolution 787 to the extent discusse d therein and in the

p resent order, s ubject to the specified conditions in the Appendix attached to th is order ;

2. We will not entertain petition s for reconsideration to this order; and

3

. We will serve t his order on IATA and the parties listed in th e service list attached to IATA’s June 20, 2014, Consolidated Answer to Objections

.

By:

Susan L. Kurland Assistant Secretary for Aviation and International A ffairs

(SEAL)

An electronic version of this document is available

on the World Wide Web at http://www.regulations.govA PPENDIX Page 1 of 2 pages

CONDITIONS OF APPROVAL

1. S cope of approval

a) Approval of Resolution 787 does not constitute approval of any agreeme nt among IATA member airlines regarding any method or business model of distributing air transportation, nor restrict the use of any channels available for the distribution of air transportation, including indirect distribution by other than airlines. App roval of Resolution 787 is limited to the creation of an XML communication standard that will permit airlines individually to enhance distribution of their products.

b) Any future agreement among IATA member airlines regarding business models for the

dis tribution of air transportation shall not be implemented without prior compliance with any applicable government approval or notification process.

2. Use of Other Data Transmissions Standards

Approval of Resolution 787 does not constitute approval of any agreement among IATA member airlines to require the use of any particular data transmission standard(s).

3. Backwards Compatibility/Other Standards

a) Any communications or message standards or protocols developed under Resolution 787

shall be o pen standards, meaning useable by distributors of air transportation and intermediaries in the distribution of air transportation, including CRSs and other aggregators, on a non

discrimina tory basis.

b) Approval of Resolution 787 does not constitute app roval of any agreement to prohibit individual IATA member airlines or groups of such airlines from continuing to utilize any communication or message protocol, including existing standards.

c) Nothing in the approval of Resolution 787 shall be deemed to be an approval of either a restriction on backwards compatibility or a restriction on development of a communications or messaging standard that is not backward compatible. Further, nothing in Resolution 787 shall be construed to inhibit the ability of di stributors of air transportation to use other standards, including existing standards, in combination with any standard developed under Resolution 787. Notwithstanding any language in Section 1.2.4 of Resolution 787, airlines and technology service provi ders are free to pursue backward compatibility of Resolution 787 communications or message standards or protocols based on their particular business needs.A PPENDIX Page 2 of 2 pages

4. Privacy and anonymous shopping

Approval of Resolution 787 doe s not constitute approval of any agreement among IATA member airlines to require the disclosure by any passenger of personal information of any kind. In addition, a pproval of Resolution 787 is conditioned on the airline or ticket agent that is requesting and receiving the personal information of the buyer of air transportation following its privacy policy in effect at the time the request is made for the sharing and storage of personal

information.

5. Data ownership

Approval of Resolution 787 does not i n any way address the issue of data ownership and specifically does not include approval of Section 1.2.7 of Resolution 787 or of any other reference to ownership in the Resolution.