COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(95) 51 final 
Brussels, 07.03.1995 
I 
REPORT FROM THE COMMISSION TO THE COUNCIL 
Report of the application of Articles 4a and 6(3) 
of Council Regulation (EEC) No. 2299/89 as amended by Regulation concerning 
a Code of Conduct for CRSs1 
1 OJ L 220 of 29.7.1989 and OJ L 278 of 11.11.1993 
Report of the application of Articles 4a and 6(3) 
of Council Regulation (EEC) No. 2299/89 as amended by Regulation concerning 
a Code of Conduct for CRSs1 
Introduction 
Article 23.2 of the Code of Conduct ("Code") for CRSs states that "The Council 
shall review the application of Articles 4a and 6(3), based on a report to be 
submitted, at the latest by the end of 1994, by the Commission." The purpose 
of this present report is to summarize the experience gained in the 
implementation of Articles 4a and 6(3) over the past twelve months. In addition, 
having regard to the need for the Commission to gain more extensive experience 
of the application of these provisions, it is proposed that the Commission submits 
a further report to the Council by 31 December 1995, and that the Council 
defers its review of Articles 4a and 6(3) until that date. The Council will then 
have a more informed position on which it can base its proposed review. 
Background 
The two articles to be reviewed by the Council concern the obligations placed 
on a system vendor to prevent its parent carriers benefitting from preferential 
treatment in the operation of the CRS which, either separately or jointly, they 
own or effectively control. Bias in the operation of a CRS can lead to important 
distortions of competition between the carriers owning the systems and other 
participating carriers. 
The particular features of the two articles that are aimed at eliminating 
discrimination are as follows: 
Article 4a provides, inter alia, that all loading and/or processing facilities 
shall be offered to all parent and participating carriers without 
discrimination. Furthermore, a system vendor must ensure that ils 
distribution facilities are separated in a clear and verifiable manner from 
any carriers' private inventory and management and marketing functions, 
and which must be established in such a way that any connection to the 
distribution facilities may only be achieved by means of an application to 
application interface available to all participating carriers. 
OJ L 220 of 29.7.1989 and OJ L 278 of 11.11.1993 
Z 
Article 6(3) refers to the obligation on a system vendor to ensure that 
the appropriate safeguards are in place so that parent carriers cannot 
access information, either on individual passengers or in aggregate form 
such as marketing data, provided by or created for air carriers other 
than in a manner permitted by the Code. 
Allegations of bias in favour of parent carriers often arise from the fact that 
CRSs evolved from internal reservation systems of air carriers, which, by their 
very nature, were designed to favour the carrier owning the system. Over the 
years, the rules governing the operations of CRSs have been strengthened to 
prevent all the most obvious forms of discrimination in favour of parent 
carriers. Nevertheless, there still remains a strongly held view in some quarters 
that, regardless of the controls placed on the operation of a CRS, ownership 
of a CRS inevitably enables a carrier to benefit from preferential treatment. 
In order to be able to respond rapidly should these assertions continue to be 
made even after the adoption of the amended Code provisions, the Council 
gave itself the opportunity to review the adequacy of the most important anti-
discriminatory provisions in the early stages of the life of the Code. 
The new requirement that a system vendor has to provide other participating 
carriers with an equivalent means of access to its facilities as those enjoyed 
by its parent carriers has had far reaching consequences for CRS operations. 
For example, system vendors of hosted systems (CRSs where the parent 
carrier's internal reservation systems is housed in the CRS it owns) now have 
to ensure that all parent and participating carriers have the possibility to 
access the distribution facilities of the CRS through the same application to 
application interfaces. 
An extensive debate has taken place in the CRS industry as to how the 
adequacy of the procedures put in place by system vendors in response to 
such detailed rules could be verified. In particular, it is generally considered 
that the most satisfactory way to determine the adequacy is through the 
detailed examination of the system by independent experts. 
In this context, the Council had recognised the need for the arrangements 
described in Articles 4a and 6(3) to be tested in a practical manner. It therefore 
included a provision in Article 21 a. 1 that a system vendor should ensure that 
the technical compliance of its CRS with Articles 4a and 6 is monitored by an 
independent auditor. The system vendor is required to submit the auditor's 
report, on the inspection and its findings, to the Commission at least once a 
year, with a view to the Commission taking any necessary action under Article 
11 of the Code (enforcement provisions). 
Present position 
In drafting the report on which the Council can base its review, the 
Commission considers it essential that it has a sufficient volume of background 
information available on the practical effects of the implementation of Articles 
4a and 6(3). This information can be obtained from two principal sources, 
firstly, from the technical auditors' reports to be submitted to the Commission 
in accordance with Article 21a.1, and secondly from the examination of 
complaints submitted under Article 11 In both cases, the information presently 
available to the Commission is extremely limited. 
In respect of the technical audit, the Commission was aware that, in the first 
year, system vendors would face difficulties in defining the exact scope of the 
audit to be carried out, when appointing their technical auditors. The 
Commission also needed to have its own standard against which it could 
measure the adequacy of the controls carried out by the system vendors' 
auditors. 
The Commission recognized that the definition of the controls to be applied by 
the system vendor and the audit of those controls could only be carried out by 
suitably qualified experts. Consequently an initial list of qualified auditors was 
drawn up. Furthermore, in January 1994, the Commission initiated the 
proceedings necessary to appoint a firm of consultants to carry out a study 
entitled "Guidelines for undertaking audits under Article 21a of Council 
Regulation 2299/89 as amended by Council Regulation 3089/93". The purpose 
of the study was to define an approach to the execution of a CRS audit, 
together with a suggested series of audit procedures. It was also to provide 
models of the types of audit opinion that could be given by the auditors. 
The Guidelines were developed by consultants in close collaboration with a 
large number of CRS industry experts, and following several meetings of a 
consultative group set up for this purpose. The final report was submitted to 
the Commission in October 1994, and was immediately transmitted to the 
CRSs to assist them in their selection of technical auditors. This report has 
also been sent to the Member States directly. 
In the knowledge that the Commission was intending to publish guidelines for 
the carrying out of the audit, most system vendors had delayed the 
appointment of their technical auditors. A consequence of the delay in the 
appointment of the auditors is that most of the auditors' reports on the first 
year of CRS operations since the entry into force of the amended Code will 
only be submitted in the first quarter of 1995. The Commission has so far only 
received one report. 
The audit reports are considered to be a prime source of information for the 
Commission when drafting its report to the Council required by Article 23. 
Given the present situation for the submission of the technical auditors' 
reports, the Commission considers that an important element of the 
information necessary for the preparation of the report on which the Council 
4: 
is due to base its review is absent. 
The Commission has only received one complaint relating to infringements of 
either Article 4a or 6(3) since the entry into force of the Code. The complaint 
concerns the confidentiality of passenger information contained in ticketing 
data, and was submitted to the Commission in October 1994. The complaint 
is currency being investigated by the Commission. It is not considered that 
this complaint can form an adequate basis on which to draft the report. 
Conclusion 
In the absence of a more substantial volume of information on which the 
Commission can base its examination of the impact of Article 4a and 6(3) on 
the operation of CRSs, it is not considered possible to produce a 
comprehensive report on which the Council can, in turn, base its own review. 
For this reason, and because only one report has been received, it is therefore 
proposed that a second report on which the Council shall base its review of 
Articles 4a and 6(3) of the Code, shall be submitted by the Commission by 31 
December 1995. 
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ISSN 0254-1475 
C0M(95) 51 final 
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Catalogue number : ÇB-CO-95-061-EN-C 
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