GDS Deregulation

Jack Noble, Northwestern Travel's President & Chief Operating Officer comments on the U.S. DOT's decision to drop most rules governing travel global distribution systems (GDS).

You probably have read or heard that the U.S. Department of Transportation (DOT) has decided to deregulate GDSs and, accordingly, will drop most of its rules governing GDSs on January 31st and the rest of the rules on July 31st.

The good news came when the DOT released its decision to the public on the last day of 2003. GDSs have been regulated since 1984.

We are happy that the government has decided to let the market work freely - that's one good thing.

Another good thing is that the government will not meddle in contractual relationships between GDSs and airlines or between GDSs and travel agencies, large and small, web-based and traditional. Those relationships will also be allowed to work freely of government regulation.

Healthy, free markets are good. Remember what happened after airlines were deregulated? Competition increased, flight choices for consumers increased, more people in more markets were able to fly, and fares dropped.

We, and others, were concerned that the government might have added regulations to an already regulated industry. This would have caused GDS prices to travel suppliers, like airlines, and to travel agencies, like us, to be subjected to upward pressure. Now, because of GDS deregulation, we expect downward pressure on pricing to continue, and that is great news to our customers.

You may have heard or read that GDS deregulation will eliminate the prohibition of "display bias." The government's expectation is that deregulation will allow enough free market competition among GDSs (current players and new players) to prevent one or another from biasing their displays with inventory of, shall we say, a generous supplier, i.e. a supplier that offers to pay the GDS to have their inventory biased.

Even so, Northwestern Travel Management will have processes in place to spot and react to any display bias, safeguarding our customers’ right to fair and competitive pricing information from any and all travel suppliers listed in a GDS. Besides that, Northwestern Travel Management is one of Worldspan’s largest customers, and in the industry we are large enough and influential enough to demand fair and competitive inventory displays from any GDS we choose to use.

Bottom line: deregulation of GDSs is the best way for our company and our customers to move forward into the 21st century.

Other Comments:
Read the GDS provider Sabre's comments, here.
Read the comments from NBTA (National Business Travel Association) here.
Read the GDS provider Galileo's comments, here.