The US travel industry is divided over a government probe into competition, reports Ian Taylor
The US Department of Justice (DoJ) and Department of Transportation (DoT) launched a “broad public inquiry” into competition in US air travel, including into sales, pricing and distribution, on October 24.
The announcement so close to the US presidential election on November 5 was dismissed as a “political stunt” by the US Travel Association (USTA), while the Airlines for America group suggested “political motivations”.
But the American Society of Travel Advisors (Asta) – US equivalent of Abta – welcomed the inquiry, hailing it as “a vital response” to Asta’s “year-long advocacy”. It suggested there had been “an alarming decline in competition in the US airline industry, resulting in higher prices and fewer choices for consumers”.
Asta complained to the DoT in July 2023 accusing American Airlines of “abusing its market power” and urging government intervention to halt a “reckless” implementation of new distribution capability (NDC) technology “to the detriment of consumers and all distribution intermediaries”.
It alleged American Airlines’ removal of more than 40% of its fares from “non-NDC booking channels” had caused “serious consumer harm in the form of higher air fares” and argued: “The erosion of meaningful competition in the airline industry contributed to the ability of AA to abuse its dominant market power.”
American reversed its decision this June, noting: “Our approach has driven customers away.” (Travel Weekly, June 7)
Asta noted: “Asta brought these concerns to the attention of both agencies more than a year ago and we welcome the opportunity to share our members’ views.”
The joint DoJ and DoT request for information (RFI) covers a range of issues on anti-competitive conduct “and the availability and affordability of air travel options”, including “airline mergers, exclusionary conduct, airline ticket sales, pricing and rewards”.
The wide range of questions suggests an element of box-ticking to please multiple interest groups rather than a focused attempt to address specific issues. But US transportation secretary Pete Buttigieg said: “Our goal is to identify and remove barriers to competition.”
The USTA dismissed the inquiry as “in a long line of disappointing political stunts”, saying: “Air travel could be improved by investing in technology, funding airport improvements and addressing the shortage of 3,000 air traffic controllers. Rather than solve these long-standing problems, the Biden administration is choosing to politicise the air travel process.”
But crucially for Asta, the inquiry will look at “air transportation sales channels, pricing . . . and the impact on the availability, access and affordability of air travel” as well as “the effects of consolidation and anticompetitive practices in other parts of the aviation industry”, including on “travel agents or other vendors of travel services”.
The government agencies are also seeking information on anticompetitive or unfair business practices in the industry, including “practices by dominant firms that abuse their size and power”.
The consultation will close on December 23. The outcome of the US presidential election may determine whether the DoJ Antitrust Division subsequently decides to act.