Mobility and transport

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Air travel - Computerised reservation systems (CRS)

Summary
Evaluation
Commission Proposal
Legal Act
Implementation

Overall state of play:

Evaluation – Finalised: SWD(2020) 9, 23.01.2020
Commission Proposal – On-going: to be adopted by the Commission in 2023

State of play, main conclusions, outlook

CRSs are computerised reservation systems used by travel agents (online and offline) and large travel management corporations as one of the available points of access to information about schedules, availability and fares for booking airline tickets, rail tickets and other travel-related items. Regulation (EC) 80/2009 on a Code of Conduct for computerised reservation systems (CRS) aims to prevent abuse of market power and promote competition, thereby protecting consumer interests, through ex ante regulatory measures governing the relationship between air carriers, CRS providers and travel agents.

Of particular relevance in the context of REFIT, is the specific objective to simplify and improve the legislation applicable to air ticket intermediaries, removing duplication wherever possible.

Given the strong thematic links, the potential revised CRS Code of Conduct could be integrated in the new initiative on Multimodal Digital Mobility Services (MDMS – see separate entry in the Scoreboard). The MDMS initiative looks at simplifying planning and purchasing of transport tickets across the EU and ensuring a level playing field between all players active in the ticket distribution market.

The Commission is carrying out an impact assessment in view of the adoption of a possible legislative initiative by 2023.

Estimated savings and benefits

The initiative is expected to reduce the administrative burden on CRSs by imposing lighter reporting obligations on ownership and governance.

Fit for Future Platform

The Fit for Future Platform has adopted an opinion on Computer Reservation System on 10 December 2021, as part of the Platform’s 2021 annual work programme. The Platform made 6 suggestions to ensure that the regulation is forward looking, relevant and efficient, to update the reporting requirements, to strengthen the enforcement, ensure access to all airfares for travelers, to promote multimodality in line with the sustainable development goals and the sustainable mobility strategy and simplify the sectoral personal data provisions, where appropriate.

F4F Recommendation 1: ensure that the Regulation is forward looking, relevant and efficient in the light of new challenges and technological progress in the field of air ticket distribution, including all players competing in the market (also SMEs).

The Commission is working to prepare the revision of the regulation. One of the objectives of the revision and the targeted repeal of the Regulation is indeed to ensure that the legal framework remains fit for purpose in light of technological and market changes, in line with the Platform’s suggestion.

F4F Recommendation 2: update of the reporting requirements to reflect new market realities, given that the risk of conflict of interests between CRS providers and air carriers is no longer significant, due to almost complete divestment of airlines from CRS.

The Commission is working to update the reporting requirements on the ownership structure and governance model in line with proposed changes to the parent carrier provisions, and to ensure that the administrative burden is minimised. In particular, duplication between these requirements and similar requirements which in any case apply to all listed companies will be removed.

F4F Recommendation 3: enforcement should be strengthened in order to ensure the reduction of non-compliant practices which are detrimental to competitors and consumers as well as complaints.

Effective enforcement is an essential part of a reliable legislative framework. The Commission considers this as one of the areas for possible improvement and will take stakeholder views into account when preparing the proposal.

F4F Recommendation 4: ensure access to all elements of airfares, meaning that prices should display both basic fares and “ancillary” services (e.g. luggage fees, additional leg room, etc.), so travellers can compare and choose the best travel options.

Communication of information on optional price supplements to the general public is a requirement of Article 23 of Regulation (EC) 1008/2008, which is also currently under review. This issue will be addressed in the context of the impact assessment of that initiative, which is scheduled for 2023, with consideration to the significant economic, social and environmental impacts.

F4F Recommendation 5: CRS Regulation should promote multimodality in line with SDGs and the sustainable mobility strategy, thus reducing costs to consumers and introducing more personalized and accessible services.

The 2020 evaluation of the regulation found that there is insufficient evidence to confirm that the CRS Code of Conduct remains the most appropriate or necessary vehicle to achieve the objective of promoting multimodality. The Commission initiative on Multimodal Digital Mobility Services (“MDMS”) will specifically aim at addressing this Recommendation, to promote comparability of travel options within one mode and across modes and facilitate consumer choice and mobility, as well as more sustainable mobility.

F4F Recommendation 6: the sectorial personal data protection provisions should be maintained but where appropriate reviewed and simplified, in order to increase the coherence with GDPR.

The evaluation found that the objective of consistent application of data protection rules is being fully met by the General Data Protection Regulation (GDPR). Full coherence with GDPR will thus be assured through the repeal of the sector-specific provisions. Targeted guidance may be considered to ensure ongoing clarity.

State of Play

Finalised: SWD(2020) 9, 23.01.2020

Scope:

Regulation 80/2009 of the European Parliament and of the Council of 14 January 2009 on a Code of Conduct for computerised reservation systems (CRS).

Evaluation findings:

Since the entry into force of Regulation 80/2009, the most significant market changes are almost complete divestiture of airlines in CRSs, the rise of alternative distribution channels and the increase in the direct distribution of air tickets. The most significant technological change concerns the penetration of the internet to individual households across the European Union, which rose from 55% in 2007 to 89% on average in 2018. At the same time, the use of mobile devices to access the internet increased from 36% in 2012 to 69% in 2018 in the EU. While CRSs continue to be an important player in the distribution of airline tickets, their share of bookings by volume has further decreased since the 2007 impact assessment.

Overall, the objectives of ensuring a level playing field and increasing transparency may remain relevant. However, in view of developments in air ticket distribution, it is not clear whether it remains necessary to complement general EU competition rules with specific sectoral treatment of traditional CRS services in order to achieve a level playing field. Many stakeholders confirmed nonetheless that the transparency requirements in the form of the neutral display are still important in this respect.

With or without the CRS Code of Conduct, EU competition rules would continue to apply. Preventing parent carriers from distorting competition between CRSs and/or between themselves and participating carriers therefore no longer seems a relevant objective for ex ante regulation. The provisions of the CRS Code of Conduct may therefore no longer be necessary.

Access to and preventing abuse of marketing data (MIDT data) still seems relevant to a certain extent because such data remain an important tool for air carriers in market research, and because some travel agents consider that MIDT data have been used unfairly to put pressure on them. However, there is no clear evidence whether it remains necessary to complement the general EU competition rules with sector-specific provisions to this end.

The objective of consistent application of data protection rules is being fully met by the General Data Protection Regulation (GDPR). However, since the provisions in the two pieces of legislation differ in certain respects, in terms of the level of detail or the scope, there needs to be a further cost-benefit analysis of the CRS Code of Conduct’s rules, where these go beyond the GDPR.

The CRS Code of Conduct contains very limited provisions on promoting rail transport and inter-modal transport, and the evaluation has revealed that only a few rail companies participate in CRSs today. However, that does not mean that this specific objective is irrelevant and that a possible initiative to promote this objective should necessarily be excluded in the future. Nonetheless, there is insufficient evidence to confirm that the CRS Code of Conduct remains the most appropriate or necessary vehicle to achieve this objective.

Estimated savings and benefits

Overall, costs related to the CRS Code of Conduct seem to be minimal and the benefits seem to outweigh the costs.

In terms of benefits, the removal of restrictions of contractual relationships between CRS providers and carriers seem to have led to more tailored offers for the carriers.

The CRS Code of Conduct imposes on-going direct costs to CRS providers derived from the reporting requirements (audits) of Article 12. As the CRS providers are all publicly listed companies these reporting requirements seem redundant as this is already publicly available information.

The 2007 impact assessment estimated a cost of audit for each CRS provider to be in the range of € 70,000 to € 100,000 per year per CRS (around between € 82,000 and € 117,000 in current euros according to the 2020 evaluation support study). The current ownership and governance structure reporting (audit) requirements are estimated to impose a cost of € 7,500 per year per CRS (according to the impact assessment support study).

State of Play

On-going: to be adopted by the Commission in 2023

Which objective(s) does the Commission pursue?

The general objective is to foster competition and innovation in airline ticket distribution and thereby improve market efficiency and consumer benefit.

The specific objectives are:

• To simplify and improve the legislation applicable to air ticket intermediaries, removing duplication wherever possible.

• To promote undistorted competition among B2B intermediation services in the distribution of air tickets.

• To ensure that a level playing field for access to and use of ticket distribution services exists for all carriers in order to promote undistorted competition.

Estimated savings and benefits

The initiative is expected to reduce the administrative burden on CRSs by imposing lighter reporting obligations on ownership and governance.