Asociación Latinoamericana y del Caribe de Transporte Aéreo | Latin American and Caribbean Air Transport Association

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_ 6355 NW 36 Street, Suite 601 | Miami , Florida 33166

– USA | Tel . +1 786 388 0222

- Fax +1 786 522 7315 | www.alta.aero United States Department of Transportation 1200 New Jersey Avenue, S.E. Washington, D.C. 20590

**RE: DOT** **- OST** **- 2013**  **- 0048**  **- 0001**  To Whom It May Concern, I am writing on behalf of the Latin American and Caribbean Airline Association (ALTA) in support of an “Application For Approval of An Agreement (Resolution 787) by the International Air Transport Association” (hereinafter “Resolution 787”). ALTA strongly supports the right of the global ind ustry to develop a new data transmission standard that will enable a more efficient and effective indirect distribution of airline products and services. As noted in the IATA filing, Resolution 787 is focused solely on updating a long used but out of date data transmission standard to better meet the needs of today’s airlines, the distributors, and, most importantly, the end customer. The development of this standard will require the active participation of all parties that either today distribute airline p roducts and services or seek to do so in the future. This standard will enable competition at the airline and distributor level and advance the interest of the general public. We urge DOT to promptly approve this application and encourage the industry to w ork together to support the development of this new data transmission standard. The original airline distribution network was developed over 40 years ago. It remained as originally designed until such time as the Internet and data processing capabilities e nabled airlines to present offers directly to their customers without reliance on third parties or a cumbersome and limited fare and availability filing system. Over the last several years, the industry has moved to one dominated by the original proprietary network to one where customers are increasingly purchasing their tickets and ancillary services directly from airline websites or through travel agents via a direct connect system. Most recently, the GDSs are entering this new direct connect market, as c an be seen by the recent partnerships between Travelport and American Airlines and Air Canada respectively. Resolution 787 is designed to support what is already happening in the market by standardizing the data connection between airlines, aggregators (li ke the GDSs) and travel agents. This will reduce the cost associated with developing these connections and facilitate the delivery of the type of content via the indirect channel that customers have come to expect when going directly to the airline website s. This standardization supports a more efficient air transport system and should be embraced by DOT.Asociación Latinoamericana y del Caribe de Transporte Aéreo | Latin American and Caribbean Air Transport Association

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_ 6355 NW 36 Street, Suite 601 | Miami , Florida 33166

– USA | Tel . +1 786 388 0222

- Fax +1 786 522 7315 | www.alta.aero As in any market evolution, there are incumbents that are fearful the new way of doing business will threaten their market position in the old model. In t his case, critics challenged Resolution 787 as anticompetitive and anti

- consumer. It is worth comparing the allegations to the facts: **Privacy** It was argued that Section 3.1.1.1.2 of Resolution 787 reflects the intention of airlines to require passengers to give up their right to privacy in order to receive an offer going forward. This argument shows either a lack of understanding of data transmission standards or a decision to mislead DOT and the public as to the intent of this section. Resolution 787 calls for the establishment of a new XML based data transmission standard to replace the outdated EDIFACT standard. When developing a data transmission standard, the industry needs to accommodate all potential data elements that may be included in any transmiss ion via the indirect channel anywhere in the world. Further, the goal is to develop this standard in a way that it can accommodate an ever changing marketplace over a long period of time. As such, Section 3.1.1.1.2 accommodates elements like nationality to support, for example, countries in which the local governments mandate that nationality be collected from the customer. It also accommodates customer type (adult/child), an element that is already collected today via the GDS network. Rather than evidencin g airline intentions on what they are going to collect, the standard is designed to accommodate elements that either could or must be collected based on government and other mandates. As noted in the IATA application, these elements are not mandatory (the language is “data may include”). It was also mentioned that in an NDC environment, customers will not be able to secure anonymous offers from airlines like they do via the current GDS enabled agent network. The best place to determine what the airlines wi ll and will not require in terms of passenger data before presenting the offer is the existing airline websites. Even a cursory review of the airline websites demonstrates that customers have the option of shopping the same way as via today’s indirect chan nel (almost anonymously

– only need to identify their customer type). Nothing in Resolution 787 or NDC impacts what the airlines do via the indirect channel. Moreover, it is illogical to argue that airlines will withhold offers from any potential customer because of lack of data. Airlines are pursuing the NDC in the hope that they can offer more opportunities for customers to have seamless access to their products and services, not less. **Transparency** If the data transmission standard envisioned by Resolutio n 787 is adopted widely by the industry, it will enable airlines to know who is seeking an offer as it does today through the direct channel. Critics have suggested that moving the offer generation from the GDS to the airline will likely result in the airl ine taking advantage of the knowledge of the customer to the detriment of that customer. Again, thisAsociación Latinoamericana y del Caribe de Transporte Aéreo | Latin American and Caribbean Air Transport Association

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_ 6355 NW 36 Street, Suite 601 | Miami , Florida 33166

– USA | Tel . +1 786 388 0222

- Fax +1 786 522 7315 | www.alta.aero allegation suggests either a lack of understanding of the industry or a willful attempt to maintain the status quo at the expense of customers. Today, an increasing number of customers are buying tickets via airline websites because they are confident they are getting greater value through this channel. Airlines have the knowledge of the customer coming to their websi te. The challenge for customers is that the current market does not enable customers to seamlessly compare these complete airline website offers against other offers presented by other airline websites. In contrast, the XML standard called for in Resolutio n 787 will enable aggregators (today’s GDSs and new entrants) to seamlessly compare and contrast airline offers of all of their products and services. As such, if the airlines wanted to use the knowledge they have about their customers to present higher fa res, they would not pursue this new data standard and instead leave customers the difficult task of comparing and contrasting both complex and very different airline offers. A second argument put forth by detractors is that the current filing system is th e best guarantor of full price transparency for the consumer. However, while this was true when airline fares were all

- in fares, this is no longer the case now that airlines have unbundled their fares to better meet the needs of their customers. Today, the GDS enabled agents are only able to present fare and frequency comparisons. Customers increasingly complain about unanticipated airline and other fees not presented via this indirect channel. Further, since the airline does not know who the customer is be fore the ticket is purchased, customers are unable to take advantage of special offers they could receive by identifying themselves through the direct channel. While the filing system allows for comparison of the base fare, it does not permit comparison of the full travel offer. The data transmission standard called for in Resolution 787 will allow third parties, including today’s GDSs to present these accurate side

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- side comparisons of full airline offers. **Challenge to Existing Business Model** Opponents t o Resolution 787 suggested that airlines are pursuing NDC in order to reduce airline distribution costs by putting GDSs and agents out of business. Again, the facts tell a different story. Airlines freely acknowledge that one consideration when pursuing ND C was the need to reduce the costs of indirect airline distribution. Today airlines pay approximately $7 billion per year to the GDSs to construct and deliver offers to travel agents. Today, the Internet and data processing capabilities eliminate the busin ess need to file fares and schedules and allow third parties to construct airline offers. Today’s direct distribution costs are a fraction of the fees paid by the airlines to the GDSs. Even more troubling, the GDS network serves to commoditize airline trav el to the lowest possible fare rather than presenting the full array of products and services being offered by airlines as well as bundles of those products and services that are designed to meet the particular needs of individual customers. NDC is anAsociación Latinoamericana y del Caribe de Transporte Aéreo | Latin American and Caribbean Air Transport Association

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_ 6355 NW 36 Street, Suite 601 | Miami , Florida 33166

– USA | Tel . +1 786 388 0222

- Fax +1 786 522 7315 | www.alta.aero effo rt to both reduce airline indirect distribution costs and to better market their full menu of products and services. However, seeking to reduce costs does not mean that airlines are seeking to eliminate the need for travel agents. In fact, the opposite is true. If the data transmission standard is widely adopted, we fully expect that agents and airlines will join in a richer, more mutually beneficial relationship than they have enjoyed in the current GDS enabled network. NDC will enable agents to get seamle ss access to significantly more airline content than they currently receive from the GDSs. Agents will therefore have the opportunity to increase their value to their travel customers by navigating the myriad of offers and options being presented by the ai rlines. The airlines will rely more on agents to navigate these offers and present them in a way that best meets the customers’ particular needs. Nor does NDC envision eliminating the need for GDSs. We anticipate that if this standard is widely adopted, airlines will slowly reduce the number of products and services they file with third parties. As such, the existing GDS role of constructing airline offers will diminish over time. However, GDSs will still be well positioned to serve as an aggregator of th e various airline offers for presentation to travel agents. In summary, ALTA firmly believes that Resolution 787 will stimulate competition, increase innovation and reduce costs in the airline tickets distribution sector by bringing value and benefits to t he end customers. The modernization of services will eliminate competitive barriers thereby giving rise to system

- wide economies that would result in a more competitive and efficient industry. Reductions in costs will make the Airline Industry more competi tive and hence more attractive to new and existing customers. Yours truly,

Alex de Gunten Executive Director Latin American and Caribbean Air Transport Association (ALTA)