BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. ___________________________ ) In The Matter of ) ) Docket No.

OST-2013-0048 ) Agreement Adopted by the ) Passenger Services Conference ) Of the International Air ) Transport Association as ) Resolution 787 ) __________________________ ) SURREPLY OF OPEN ALLIES FOR AIRFARE TRANSPARENCY Open Allies for Airfare Transparency (Open Allies) hereby responds to the June 21, 2013 Reply filed by IATA in this docket.1 Because IATAs Reply only further muddies the water with respect to Resolution 787, Open Allies renews its request that the Department reject IATAs Application for approval of that Resolution. In its Reply, IATA repeats its claim that it is merely seeking the Departments approval of a process for developing a new XML data transmission standard and observes that the adoption of XML to support airline distribution is not controversial. IATA Reply at 4. However, as IATA itself admits (see id. at 4-5), Resolution 787 is highly controversial. The reason is that, on its face, Resolution 787 goes well beyond an airline agreement on development of an XML standard and sets forth a new airline distribution model, as even IATA concedes. See, e.g., IATA Application at 2 (stating that it is not asking the Department to approve the stated business requirements or marketplace aspirations of NDC that are included in
Open Allies submits this Surreply on the assumption that the Department will accept IATAs Reply, which was submitted with a Motion for Leave. Further, Open Allies is submitting contemporaneously herewith a Motion asking the Department to accept this Surreply into the record in this proceeding. As explained in that Motion, IATAs Reply has for the first time proposed significant conditions to any DOT approval of Resolution 787. Open Allies believes that this Surreply, including the discussion herein regarding the proposed conditions, will aid the Departments review.
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Resolution 787); id. at 5 (remarking, incongruously, that DOT should not ignore the aspirations of IATAs NDC described in Resolution 787). It is for this reason that IATAs Resolution has drawn opposition from hundreds of commenters, including the several hundred members of Open Allies. From the start, IATA has, as a practical matter, asked the Department to overlook the significant divide between what IATA says Resolution 787 is, on the one hand, and the plain terms of the Resolution, on the other. This request has created enormous confusion and ambiguity. If the Department were to approve Resolution 787, one could only wonder whether the Department approved the Resolution as written, or as IATA characterizes it and has asked the Department to approve it (i.e., only insofar as it describes a means to modernize distribution communications technology with a new XML standard). This problem is compounded by the fact that Resolution 787 is almost entirely about a new distribution model and has almost nothing to say about an XML data transmission standard. Moreover, since its original filing, IATA has further obfuscated its request by (1) adopting another resolution on its New Distribution Capability (NDC) at its Annual General Meeting that is inconsistent with Resolution 787 and (2) proposing conditions to approval in its Reply that are contrary to the plain language of Resolution 787. Therefore, as discussed in Part I below, IATAs Application for approval of the Resolution should be denied, without prejudice to its future filing of a resolution that matches its request. As Open Allies demonstrated in its May 1, 2013 Answer, IATA-prepared documents show that the intent underlying Resolution 787 is to rework airline distribution by replacing the existing pro-competitive system of transparent, easily-comparable fares which the airlines have acknowledged constrains prices with a distribution system designed to facilitate the shrouding

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of fares. This will allow airlines to increase prices, particularly for less price-sensitive business travelers. IATA still has not shared the relevant documents with DOT, and in fact opposes Open Allies pending motion that it be required to produce additional relevant documents bearing on Resolution 787. Nor does IATAs Reply address the serious concerns about the competitive impacts of its proposal raised by Open Allies and other commenters. Instead, IATA proposes certain conditions that it suggests the Department attach to its approval of the Resolution. The proposed conditions, however, would not alter the terms of Resolution 787. As explained in Part II below, the conditions would only further muddy the waters and highlight the inconsistency between the terms of Resolution 787 and IATAs characterization of those terms. It speaks volumes that IATA proposes multiple conditions to try to clarify exactly what it is and is not seeking approval for. Instead of fixing Resolution 787, the proposed conditions underscore that Resolution 787 addresses much more than IATA claims to be asking the Department to approve. Rather than try to fix the Resolution with a series of conditions, the Department should reject Resolution 787 and thereby avoid inevitable controversy over inconsistencies and ambiguities that exist between the Resolution and the conditions. The Department can then consider any new resolution or (perhaps more appropriately) recommended practice that IATA might develop that is tailored to its request for approval and that excludes the elements of NDC that have no place in a Department-approved IATA resolution. In Part II below, Open Allies further addresses the problems with the conditions proposed by IATA. If the Department does not reject IATAs Application outright, it should require IATA to produce relevant documents, as discussed in Part III below. Such documents will help shed light

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on the goals underlying Resolution 787 and allow the Department to make a more informed decision on the Resolution. Finally, Open Allies urges the Department to refrain from even the appearance of favoring one distribution model over another. For reasons explained in Part IV below, the Department should allow the market to govern the choice of distribution models and should not endorse a model collectively agreed by airline competitors. I. IATA Should Withdraw Resolution 787 IATA filed an Application that created confusion and ambiguity right from the start. In that Application, it asked the Department to approve Resolution 787 only to the extent that it establishes a process for developing an XML standard. However, the Resolution, by its express terms and IATAs own admission in the Application and certain underlying documents, also defines a new airline distribution model, i.e., NDC. Therefore, from the very beginning, there has been substantial uncertainty regarding exactly what IATA was asking DOT to approve, and exactly what any such approval would (and would not) cover. This uncertainty is reflected in the comments filed in response to IATAs Application, including those filed by airlines, many of which express support for NDC. Notably, Deltas March 21, 2013 comments are completely focused on changes to distribution that will be effected by NDC. Delta observes (at pages 1-2) that Resolution 787 will move the industry away from a commodity based sales model under which airline products and services are sold in a commoditized manner.2

Comments by other airlines also focus on the new distribution model defined in Resolution 787. For example, Finnair states (at page 1) that it supports Resolution 787 because, among other things, it would allow airlines to provide more personalized offering and general content for consumers and give consumers more choice of options and comparability between airlines when different merchandising options are available for comparability. The African Airlines Association states (at page 1) regarding Resolution 787 that [t]he new airline distribution model will change the way an airline distributes its

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IATAs actions since filing the Application have only made matters worse. As discussed in Open Allies June 5, 2013 Supplemental Answer, on June 3, 2013, the 69th IATA Annual General Meeting (AGM) adopted another resolution on NDC (the AGM Resolution). The AGM Resolution contains statements that are at odds with Resolution 787, and only adds to the confusion and uncertainty. As Open Allies pointed out at page 4 of its Supplemental Answer, the terms of Resolution 787 are uncertain and shifting, and appear to have changed once again with the adoption of the AGM Resolution. Open Allies urged that IATA should withdraw its current application for approval and embody the pertinent principles of the AGM Resolution in a modified and final version of Resolution 787 approved by the PSC and re-filed with DOT. Only then can there be any certainty about the exact agreement for which IATA seeks DOT approval, the purpose and effect of that agreement, and the possible consequences of DOT approval on distribution of airline services, airline competition and personal privacy rights. However, IATA did not do so. Instead, IATA filed a Reply in this docket that proposes conditions to any DOT approval of Resolution 787. The proposed conditions are not only inconsistent with Resolution 787, they are also completely different from the provisions in the AGM Resolution. For example, on the very important question of whether consumers will continue to be able to easily and anonymously comparison shop (as they can today), IATA is all over the place. Both the Application and Resolution 787 indicate that the answer is no. See Application at 6 (referring to ending the EDIFACT standard), 10 (IATA will not constrain the new standard by attempting to make it backward compatible) and 11 (distribution through the legacy networks will continue only for some time); Resolution at 1.2.4 (there should be no constraints driven by any
products and services. American Airlines, Qatar Airways and British Airways/Iberia similarly support Resolution 787 for reasons that are focused on NDC.

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requirement for backwards compatibility; backwards compatibility is justified only if there is a defined business need). The AGM Resolution, on the other hand, affirms at paragraph 2 that the enhanced standards should support current shopping methods, including anonymous shopping by customers. On yet a third hand, one of the proposed conditions (which, like the AGM Resolution do not actually amend Resolution 787) says: Approval of Resolution 787 does not constitute approval of any agreement among airlines to prohibit individual carriers from continuing to utilize the EDIFACT standard. What does all this mean? And what would Department approval mean? Open Allies submits that the Department should not approve a Resolution surrounded by such ambiguity. Similarly, on the issue of whether Resolution 787 contains a mandatory requirement, Resolution 787 states that member airlines and system providers shall apply the procedures in Resolution 787 when distributing enhanced content. This is mandatory language. By contrast, IATA asserts at page 7 of the Application that Resolution 787 does not obligate any IATA member to implement the provisions in whole or in part. The AGM Resolution states at paragraph 4 that airlines and other industry players would be free to decide whether or not to adopt the enhanced standards to support some or all of their distribution needs. In its Reply, IATA proposes an altogether different condition that says: Approval of IATA Resolution 787 does not constitute approval of any agreement among airlines to restrict their use of any other data transmission standard(s). Again, it is unclear exactly what DOT approval of Resolution 787 would mean in light of all these contradictory statements. In short, IATA has created a lot of confusion. At this point, there is Resolution 787, which has been overlaid by an Application that appears to be describing a completely different resolution; these documents have then been overlaid by the AGM Resolution, and all of that has

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been overlaid by the proposed conditions. The result is a jumbled heap. If DOT were to approve Resolution 787, it would be totally unclear what such approval means and to which parts of Resolution 787 such approval extends. IATAs request is not only ambiguous, it has also engendered substantial opposition from a diverse group of commenters, including Open Allies, GDSs, online and traditional travel agents, corporate travel departments, travel agent and tour operator associations, business and consumer groups, individual consumers, and the American Antitrust Institute. The opposition was generated for a simple reason the terms of Resolution 787 are in many cases troublesome or at least ambiguous, and the trail of documents created by IATA and certain of its member airlines makes quite clear that the goal of the Resolution goes far beyond any communications standard and is in fact to re-design the current distribution business model to become NDC.3 Any such re-design of a fundamentally competitive distribution system should remain the bailiwick of the free market, and should not be part of a Department-approved resolution by most of the worlds airlines. Open Allies, in particular, submitted documents showing that: a. b. the XML standard-setting exercise that IATA says it is proposing is inextricably intertwined with a new business model for the pricing and sale of airline tickets; the purpose and effect of the new business model is to impose on consumers and the travel industry a new opaque model for the pricing and sale of airline tickets that would undermine or even end the current transparent and pro-competitive regime of published prices that any consumer can shop anonymously; IATA and the airlines have confirmed that the existing transparent system of publicly available fares that can be viewed anonymously has constrained their ability to raise prices; and NDC is the solution to that problem.

c.

d.

See pages 17-29 of the May 1, 2013 Open Allies Answer for an analysis of these documents.

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In its Reply, IATA ignores the documents demonstrating that NDC is designed to eliminate fare transparency, except to state (at page 17) that commenters who argue that IATA is seeking to replace the existing system seem to be proceeding on the mistaken premise that the standardized format envisioned in Resolution 787 mandates a change in business practice. However, IATA also acknowledges, as it must, that Resolution 787 which according to IATAs own definition is a binding action agreed by airline competitors describes a new business model. Indeed, any objective reading of Resolution 787 reveals that it deals almost entirely with the new business model and very little with an XML standard. Contrary to IATAs claim (at page 22 of the Reply) that opponents of approval have failed to meet their burden of proof, Open Allies unrefuted showing based on IATA-generated documents regarding the intent and likely harmful effect of Resolution 787 demonstrates that the agreement is adverse to the public interest. IATA portrays concerns expressed by commenters as hobgoblins invented by those vested in the status quo. Reply at 18. It also states that commercial opponents appear in the main to be current beneficiaries of the legacy distribution system. Id. at 5. These comments belittle the serious concerns raised by commenters and ignore the depth and breadth of opposition to the Application. For example, the Global Business Travel Association, which describes itself as the leading trade association serving business travel buyers and providers, serving a network of more than 20,000 business travel professions, urged DOT to reject Resolution 787, saying (at page 6 of its April 4, 2013 Comments): Based on the lack of clarity and extremely limited information provided to date, the business travel buyer community has no choice but to urge the DOT not to approve the Application until any benefit or adverse impact is clearly defined. Business travel -8-

buyers want and need a voice in this regulatory proceeding, as well as in the development and implementation of changes to fare distribution models. With hundreds of billions of dollars spent on airfare each year, no interest is more directly impacted by more or less transparency and more or less choice than the business travel community. The Consumer Travel Alliance, joined by Airlinepassengers.com, likewise urged rejection (at page 2 of its April 29, 2013 Comments): IATAs Application for Approval of an Agreement (Resolution 787) by the Department of Transportation (DOT) should be DOA. DOT should never approve an application that seeks to limit technology. DOT should never approve an application that seeks to limit consumers ability to comparison shop for prices across an industry. If these are not the goals of IATA, then DOT does not have sufficient information in this application to make an informed decision.

The American Antitrust Institute also explained (at pages 6 and 7 of its May 1, 2013 Comments) why Resolution 787, in its present form, should not receive Department approval: If the intent as the Application states is limited to implementing a new technical standard governing data interchange, then IATA should withdraw its Application and issue such a standard without requesting DOT approval. If IATA does not withdraw its Application, the DOT should not assume the risk of accidentally smuggling in any aspects of the NDC model by granting unneeded approval for the XML standard. Approval of the NDC standard is a separate matter for purposes of regulatory oversight and should be presented to the agency at another time, subjected to separate notice requirements, and opened up for comment. Anything less than a separation of dockets serves to muddy the waters around the Resolution 787 proposal, risks confusing the public on the scope and breadth of the competitive issues surrounding NDC, and seriously threatens to short circuit full DOT review. The AAI submits, therefore, that the DOT cannot approve Resolution 787 in its current form. The DOT -9-

should place the burden on IATA to resolve the tension between Resolution 787 and the language in IATAs Application for which it seeks approval. Specifically, IATA must take the necessary steps to eliminate confusion as to whether it now seeks approval of the XML standard (which it believes it does not need), the NDC standard (which it believes it does not currently seek), neither, or both. The Department should respond by disapproving Resolution 787, while signaling that it would consider a more narrowly tailored resolution that comports with IATAs request to adopt a new messaging standard.4 Open Allies and others could then comment on a resolution that is consistent with IATAs stated goal, rather than the current ambiguous Resolution, made even more so by the jumble of conditions that in some cases conflict with its very terms. II. IATAs Proposed Conditions Do Not Solve the Problem The conditions proposed by IATA do not resolve the problem of the disparity between the express terms of Resolution 787 and IATAs characterization of the Resolution. As shown below, the conditions are inconsistent with the plain language of Resolution 787. Consequently, they further confuse rather than clarify the intent, scope and effect of the Resolution, and would likewise confuse the scope and meaning of any DOT approval. Moreover, the proffered conditions do not in any event remedy the problems posed by Resolution 787. A. IATAs Efforts to Disclaim that Resolution 787 Defines a New Distribution Model Are Ineffectual

In responding to commenters concerns that Resolution 787 embraces a new airline distribution model and thus IATAs request for approval appears to cover much more than what IATA says, IATA disclaims any ability or desire to dictate to any airline a particular business
The necessary amendments could be accomplished rapidly by IATA using the mail vote procedures for resolutions to be approved by traffic conferences found at Article IX of the Provisions for the Conduct of The IATA Traffic Conferences. Under the provisions of Article IX, any resolution may be adopted by mail vote if that vote is requested by the IATA Director General (subsection 1.4), with the voting period set by subsection 3 at 21 days.
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model. This response misses the point. To the extent Resolution 787 represents an agreement among airline competitors on a new distribution model (as appears to be the case from the text of the Resolution and underlying IATA-prepared documents), DOTs approval will confer the agencys imprimatur on that distribution model regardless of IATAs ability or intent to dictate anything to its airline members. This potential outcome raises serious concerns for Open Allies (and many other commenters) for two broad reasons. First, Open Allies believes that a Department-approved airline agreement on NDC would likely harm consumers and competition because it would supplant the existing regime of transparent and pro-competitive comparison shopping, provide a means to increase fares especially for less price-sensitive business travelers, reduce competition, penalize consumers who decline to provide their personal information, and invade consumer privacy. Moreover, the choice of distribution models, and the means of implementing them, should be left to the market. DOT should have no place in sanctioning a joint airline effort to impose their will by dictating the choice of distribution model to individual airlines that might not support such model and to travel retailers. As the Department has repeatedly recognized, the way in which travel options are presented to consumers is important. Airlines should not be permitted to collectively agree on a methodology for such presentation, particularly where, as here, that methodology would undermine comparative shopping. Individual airlines and independent, non-airline entities involved in the distribution and sale of air travel such as GDSs and online ticket agents have considerable expertise and should have the option to develop and select distribution models of

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their choice. Such decisions should not be made by agreement among horizontal airline competitors with the imprimatur of the federal government.5 Second, because of the uncertainty and ambiguities surrounding IATAs request, NDC would not receive (and has not received) a full airing in this docket. Nonetheless, the plain language of Resolution 787 indicates that NDC is part (indeed, the main part) of what the Department is being asked to approve.6 IATAs proposed condition does not remedy this problem. That condition states: Approval of Resolution 787 does not constitute approval of any agreement among airlines regarding any method of distributing air transportation. It is hard to figure out exactly what would be left of Resolution 787 if IATAs proposed condition were imposed, and the Department and others should not be given the task of doing so.

IATA agrees that [h]ow distribution practices evolve should be left to the market. Reply at 18. Consequently, there is no basis for the Department to approve Resolution 787 as written. See, e.g., Sections 1.1, 1.2.5.1 and 3.1. Section 1.1 states in relevant part: This resolution recognizes that a standard process is required for airlines to create their own product offer within their own systems (i.e. assemble fares, schedules and availability - all in one transaction) which will be provided directly by and owned by the airline. This will enable more agile pricing and more personalized offerings. In this way, all product offers (including ancillaries) will be available for distribution through all channels that an airline wishes to sell them through. In this regard, this IATA standard will enable the creation of a Dynamic Airline Shopping engine Application Programme Interface (DAS API) based on IATA XML messages. The focus of this resolution will describe the main business processes that are required to support it. Section 1.2.5.1 in turn provides that Enhanced Airline Distribution shall allow individual carriers to determine its own prices and the nature of those products offered, depending on who the requestor is and what they are requesting. This will require authentication and the provision of historical data based on previous transactions. Finally, Section 3.1 specifies the kinds of personal information that carriers have agreed among themselves they have the right to demand before quoting prices to consumers. See also pages 17-26 of the Open Allies Answer for discussion of the IATA-prepared documents that confirm the Resolution is an agreement on a new method for how air travel will be distributed, with that model premised on knowing who is making the request.
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Instead, the Department should not act unless IATA puts forward for approval a resolution that clearly covers only that for which it seeks approval.7 B. Passenger Privacy

IATA claims on page 10 of its Reply that nothing in Resolution 787 directs airlines to require authentication before transmitting an offer through the travel agency channel. This claim is flatly contrary to the words of Resolution 787. Specifically, section 1.2.5.1 of the Resolution states that Enhanced Distribution will require authentication and the provision of historical data based on previous transactions. IATA also takes issue with the notion that the collection of personal information will enable airlines to better identify less price-sensitive business travelers who are willing to pay higher fares. IATA says this notion strains credulity and is contrary to business reality because the airlines will not punish their most loyal and highest yield customers with higher fares or fees than they would impose on those who have little or no prior relationship with the airline. IATA Reply at 11-12. However, the business reality is that airlines already structure their fares in a way that imposes higher rates on business travelers (who are indeed their highest yield customers), while offering lower fares to leisure travelers who do not have the same loyalty

If despite these serious shortcomings the Department nonetheless were to approve the Application (an outcome which Open Allies strongly opposes), the proposed condition should be revised, along the following lines: Approval of Resolution 787 does not constitute approval of any agreement among airlines regarding any method of distributing air transportation, and this approval shall terminate in the event the IATA airlines agree upon NDC or any other distribution model without first obtaining separate DOT approval. The proposed additional language is consistent with IATAs representations in the Application. To be clear, if IATA were to seek approval of NDC in a separate proceeding, Open Allies would likely oppose such application, since Open Allies does not believe that DOT approval of an agreement by airline competitors to adopt and implement a particular distribution model serves the public interest.

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to the airline. It is, quite frankly, hard to imagine any other reason for inquiring as to whether the purpose of the trip is business or pleasure.8 IATAs argument at page 12 of its Reply that airlines will not use personal information to enhance their ability to price discriminate because consumers will seek fare quotes anonymously or obtain competing offers likewise is flawed. First, it assumes consumers will still have the ability to engage in anonymous fare shopping once NDC is implemented, which may very well be a false assumption for reasons discussed in the Open Allies Answer and below. Second, for business travelers who require nonstop service, there may be no viable competing offers if the airline has the only nonstop service in the market and has adopted NDC for that market. Finally, IATAs statement at page 12 that airlines will still be subject to privacy laws is hollow because such laws will not prevent airlines from using personal information to price discriminate and may not include adequate protections for such information. In this regard, it is important to keep in mind that this is not a situation where consumers will have a real choice about whether to provide personal information, given the binding nature of an IATA resolution. In the face of these concerns, IATA proposes the following condition: Approval of IATA Resolution 787 does not constitute approval of any agreement among airlines to require, as a condition of receiving an offer for air transportation, the disclosure by any passenger of personal information of any kind.9 One problem with this condition is that it could be read as meaning that the condition would be satisfied if consumers were provided as little as one and only one fare quote for a particular

In todays transparent distribution model business travelers who shop anonymously can take advantage of published fares set by the airlines to gain sales from the marginal customers, that is, those who would not fly if fares were set above a certain level. In an NDC world, business travelers would lose that capability and thus would pay more, particularly on routes with only one airline offering the nonstop services that time-sensitive business travelers strongly prefer.
9

Emphasis added.

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itinerary. Further, it seems inconsistent with the actual language of Resolution 787, as explained above. Notably, IATAs Reply also contains a slightly different formulation of this condition at page 33: Approval of IATA Resolution 787 does not constitute approval of any agreement among airlines to require, as a condition of receiving at least one offer for airline transportation, the disclosure by any passenger of personal information of any kind. The at least one offer language lends support to the conclusion that IATA is in fact proposing a condition that would be met if anonymous shoppers were given only one offer, even if priced at a punitively high level. Of course, any agreement between competing airlines to limit offers to anonymous shoppers to only one offer plainly would be anticompetitive and would constitute illegal price fixing.10 C. Mandatory Effect of Resolution 787

In its Reply, IATA acknowledges that the Resolution would have mandatory effect since if an IATA member airline chooses to distribute enhanced content, it would be required to use an IATA-developed XML standard.11 IATA says this is not a problem because the Resolution 787 standards are non-exclusive. IATA proposes a condition to approval that would state:

To avoid such a reading, the phrase as a condition of receiving an offer [or at least one offer] for air transportation would need to be deleted, so that the full condition would state: Approval of IATA Resolution 787 does not constitute approval of any agreement among airlines to require the disclosure by any passenger of personal information of any kind. Such a revision would not disturb any existing DOT approvals that enable airlines to require the data they need to fulfill their contracts of carriage with those who have purchased tickets. This acknowledgment is contrary to IATAs assertion in the Application that Resolution 787 does not obligate any IATA member to implement the provisions in whole or in part. Application at 7.
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Approval of IATA Resolution 787 does not constitute approval of any agreement among airlines to restrict their use of any other data transmission standard(s). As a practical matter, however, the requirement to use the Resolution 787 procedures when distributing enhanced content will result in the IATA XML standard being the only one (or nearly the only one) used by airlines and other travel distributors. An airline that has already undertaken the time and expense of making its system compatible with IATAs XML standard is extremely unlikely to choose to incur the additional time and expense involved with coding to use a different standard. Open Allies urges the Department to leave the choice of such standards to the marketplace and not to favor one standard over another by endorsing a collective airline agreement imposing a particular standard.12 D. Data Ownership

The issue of data ownership highlights another inconsistency between Resolution 787 and IATAs depiction of the Resolution. Section 1.2.7 of Resolution 787 explicitly states: This distribution model assumes each airline distributing its individual products and services is the owner of its own content. Similarly, Section 1.1 states categorically that the product offer will be provided directly by and owned by the airline. In response to concerns expressed about these provisions, IATA concedes that data ownership is an issue separate from the standard for data transmission and not to be resolved under Resolution 787. IATA Reply at 15. It proposes the following condition to approval to clarify that DOTs approval does not extend to any agreement among airlines regarding the ownership of data:

Alternatively, were any condition along these lines to be imposed, Open Allies suggests the following condition in place of the one proposed by IATA: Approval of IATA Resolution 787 does not constitute approval of any agreement among airlines to require the use of any particular data transmission standard(s).

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Approval of Resolution 787 does not constitute approval of any agreement among airlines regarding the ownership of the data that would be transmitted via the XML-based data transmission standard envisioned in the Resolution. Again, IATA proposes a condition to approval that is inconsistent with the express terms of the Resolution, thereby resulting in confusion. The Department should expect no less than that IATA will present a resolution that matches its request for approval and nothing more.13 E. Backwards Compatibility

Section 1.2.4 of Resolution 787 explicitly states that there should be no constraints driven by any requirement for backwards compatibility and that any justification for backwards compatibility must be based only on a defined business need. In response to concerns expressed by commenters about this provision, IATA argues that freedom from a backward compatibility constraint will expedite development of the proposed XML enhanced content standard and reduce development costs. IATA Reply at 16. Even if this is true, championing speed and development cost reduction as justifications for not allowing backwards compatibility implicitly assumes that the new system is good and the old one is bad. Here, that is not at all evident. The existing pro-competitive system of transparent, easily-comparable airfares has constrained fare increases, as even IATA has recognized. It is not clear, and certainly has not been shown by IATA, that NDC or IATAs putative XML standard (or a rush to implement either) will benefit consumers. Further, Section 1.2.4 is an agreement among horizontal airline

Alternatively, if any condition were to be imposed along these lines, DOT should modify IATAs proposed condition to carve out completely data ownership issues and any references in Resolution 787 to same: This approval does not in any way address the issue of data ownership and specifically does not include approval of Section 1.2.7 of Resolution 787 or of any other reference to ownership in the Resolution.

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competitors not to support other distribution models that provide consumers with fare transparency. Such an agreement is improper and should not be condoned by DOT. IATA proposes the following condition: Approval of Resolution 787 does not constitute approval of any agreement among airlines to prohibit individual carriers from continuing to utilize the EDIFACT standard. This condition does not address Open Allies concern that the opaque NDC business model would not be compatible with the current system of transparent, publicly-filed fares that any consumer can shop anonymously.14 Further, IATAs proposed condition is also too narrow because it focuses only on the EDIFACT standard and not on the use of existing (or future) XML standards that would compete with the putative IATA XML standard.15 III. If the Department Does Not Reject IATAs Application Outright, It Should Require IATA to Produce Relevant Documents On March 18, 2013 (one week after IATA filed the Application), Open Allies filed a motion for a scheduling order that included a request that IATA be required to produce relevant documents in IATAs possession relating to Resolution 787. In that Motion (at 3-4), Open Allies stated the reason for the request and described the limited scope of documents it was requesting: Given sharply contrasting views about the consequences for consumers and other stakeholders of this inter-carrier agreement, and the magnitude of the adverse effects for consumers if the agreement is as described in some IATA documents that are
Notably, the AGM Resolution states at paragraph 2 that new standards should support current shopping methods, including anonymous shopping by customers. However, no such language appears in Resolution 787 or in IATAs proposed conditions. Open Allies urges the Department to reject Resolution 787 and make clear that it will not approve any amended version of the Resolution that does not include this language. The following condition on backwards compatibility would be more appropriate if any condition were to be adopted along these lines: Nothing in this approval shall authorize any restriction on backwards compatibility, and this approval specifically does not include approval of Section 1.2.4 of Resolution 787.
15 14

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already available, we respectfully submit that IATA (including its relevant subgroups of carrier members, notably the Passenger Distribution Group members) should be required to produce in this proceeding all documents in IATAs possession (whether authored by IATA or not) that relate to Resolution 787 or NDC. In its decision of March 28, 2013, the Department extended the deadline for answers to IATAs application but deferred action on this request. In both its Answer of May 1, 2013 and its Supplemental Answer of June 5, 2013, Open Allies renewed that request, unless DOT were to dismiss IATAs application. At page 25 of its Reply, IATA urges DOT to reject this request, saying that the massive fishing expedition sought by opponents and the consequent cost and delay it would occasion are clearly inappropriate. IATAs protests about Open Allies targeted request for documents are entirely unconvincing. First, on the subject of delay, Open Allies filed the request for disclosure of information that would help shed light on the true nature of this controversial agreement just one week after IATA filed its Application. Open Allies request was a legitimate and necessary effort to get the full set of facts on the table. It was not an effort to cause delay. IATAs complaint about delay rings hollow given that it took IATA over seven weeks to submit a Reply to the timely filed opposing comments in this proceeding. Second, IATAs description of Open Allies request as a massive fishing expedition is wrong. The request is narrowly targeted to seek only documents related to Resolution 787 or NDC. No subject matter other than the very Resolution for which IATA seeks approval is covered by the request. Third, IATAs vague and unsubstantiated claims of consequent cost fall short of establishing that the request is unduly burdensome. IATA makes no attempt whatsoever to explain even the magnitude of the likely costs of document production, much less detail them. If

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such generalized protests about the burden (and delay) required to produce relevant documents were sufficient to carry the day, no party would ever be required to make disclosure of documents in its possession. IATA is the party seeking approval here. The cost of complying with an appropriately tailored document request would pale in comparison to the global effort it has invested to date in promoting NDC. Accordingly, unless the Department rejects IATAs Application (which Open Allies urges for the reasons stated above), it should require IATA to produce relevant documents as described in Open Allies Motion of March 18, 2013. It is only reasonable to allow interested parties (and the Department) to review the underlying documents to better understand what Resolution 787 is about, particularly in these circumstances where substantial uncertainty and confusion remain on that key question. IV. DOT Should Allow the Market to Govern the Development and Choice of Distribution Models IATA suggests that Resolution 787 and its NDC model are needed because the legacy systems have resisted and slowed change and are wedded to outdated standards that no longer serve the industry. Nothing could be further from the truth. GDSs have long been, and continue to be, at the forefront of technological developments in travel distribution. Moreover, as IATA itself acknowledges (Reply at 4), GDSs already use XML as a messaging standard. See also IATA Application at 5 (referring to the Sabre Red, Travelport Agencia and Amadeus Airline Retailing Platform products); Sabres May 1, 2013 Answer (describing Sabres XML implementations); Amadeus Answer at 1-3 and Exhibit I (discussing and providing examples of Amadeus XML capabilities). In fact, to a substantial degree GDSs provide the technology used by IATA member airlines.

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The results of an IATA survey (published on May 23, 2012) of airlines and GDSs on their respective XML readiness show that GDSs are far more ready than many airlines to handle XML messaging.16 At the attached numbered slide 7, IATA compiled the airline responses to questions about the capability of their major systems to utilize XML. The attached numbered slide 10 summarizes the results of responses to those questions by IT Providers, that is, the GDSs. When the two sets of results are compared, they establish that the airlines as a group lack the capability to use XML and have markedly inferior XML capabilities to those of the GDSs. Turning to the numeric scores, on a 5 point scale where 1 is fully capable, and 5 is not capable, of having their major systems use XML, the un-weighted airline average was 2.71 and the weighted average was 2.29. By contrast, the IT supplier average rating was 1.38. In other words, the average score that GDSs attained for XML readiness was far superior to the ratings the airlines gave themselves.17 The fact that the industry is already moving in the direction urged by IATA demonstrates that the marketplace around competitive technology for airline distribution is working and should be allowed to govern future developments. There is no need for the Department to interfere and to appear to favor one distribution model over another by approving Resolution 787 and the NDC model that, IATAs claims notwithstanding, remains embedded in the terms of that Resolution.

The two relevant slides (7 and 10) of the survey results are attached at Exhibit 1. Open Allies would be happy to make the full study available upon request, but did not attach all of the survey results (which exceed 50 pages) because of its bulk. IATA made no effort on the IT supplier side, unlike on the airline side, to produce a weighted average that accounted for the volumes processed. Open Allies members believe the relatively greater readiness of GDSs to handle XML messaging would have been even more striking if a weighted average had been produced by IATA for IT Suppliers.
17

16

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V.

Non-Airline Stakeholders Have Not Had a Voice in Resolution 787 IATA paints the Resolution 787 exercise as one where non-airline stakeholders have been

extensively involved. As the Answers of the American Society of Travel Agents, the European Travel Agents and Tour Operators Associations and the Guild of European Business Travel Agents, Business Travel Coalition and Open Allies make clear, this picture is not accurate. Nonairline stakeholders have had no meaningful voice in the design of NDC and the adoption by the airlines of Resolution 787. IATA also observes (at page 21) that non-airline stakeholders representing travel agents, GDSs and other technology providers are participating in a Distribution Data Exchange Working Group (DDXWG). While some representatives18 have been invited to attend the DDXWG sessions, they have been completely excluded from the development of the IATA XML standard, which is being handled exclusively by IATA and Farelogix. Everyone else has been shut out of this process. DDXWG did not choose the Open Axis XML schema over the Open Travel Alliance schema. Rather, that decision was made by the IATA Passenger Distribution Group, where only airlines have a vote. Open Allies members stand ready to work with IATA should it decide to propose a new standard. Today, Open Allies sent to IATA the letter attached hereto as Exhibit II, again making that request should Resolution 787 not be approved. Any such standard should protect the interests of consumers and have no adverse impact on transparency or competition, unlike IATAs current approach.
18

While IATA continues to suggest in public statements that full collaboration with industry associations is occurring, in fact it has refused to recognize association representatives as legitimate representatives for their industry segments in the actual development process. Meetings of industry association staff and leaders with a few IATA management representatives are not equivalent to full, transparent and open participation in the development process. The American Society of Travel Agents, among others, has been excluded from that process.

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CONCLUSION
For the above reasons, the Department should disapprove Resolution 787 without prejudice to re-filing of a more narrowly tailored resolution that is focused exclusively on an

XML communications standard, Le., the standard for which lATA purports to seek approval. If
the Department chooses not to reject the pending Resolution, it should require lATA to provide the documents requested by Open Allies before any further action is taken. Respectfully submitted,

I/tvJ ({)J IA}; ~" Andrew Weinstem

0

ExecLltive Director Open Allies for Airfare Transparency 913 S Street, NW Washington, DC 20001 202-667-4967 andrewwstn@gmail.com

July 15,2013

EXHIBIT I IATA SURVEY RESULTS (SLIDES 7 AND 10)

B. OVERALL DATA PROCESSING ENVIRONMENT

4. Are your major systems in the following business areas CAPABLE of using XML technology to exchange data with 3rd parties?
Please use the following rating scale: 1 - Fully capable 2 - Mostly capable 3 - Capable to a limited extent 4 - Capable to a very limited extent 5 - Not capable

AIRLINES

5
(no)

3
2.71 2.29 2.64 2.48

3.00 2.86

3.03 3.00

3.00 2.88

3.00 2.76

2.91

a. Airline distribution b. Reservations management c. Departure control d. Planning and scheduling (incl. slot management) e. Flight operations f. Airport operations g. Baggage handling
1st EATF Survey XML

2.39

Average ranking Highest ranking Lowest ranking Weighed average a b c d e f g

(all)

23 May 2012

B. OVERALL DATA PROCESSING ENVIRONMENT

4. Are your major systems in the following business areas CAPABLE of using XML technology to exchange data with 3rd parties?
Please use the following rating scale: 1 - Fully capable 2 - Mostly capable 3 - Capable to a limited extent 4 - Capable to a very limited extent 5 - Not capable

IT SUPPLIERS

5
(no)

a. Airline distribution b. Reservations management c. Departure control d. Planning and scheduling (incl. slot management) e. Flight operations f. Airport operations g. Baggage handling
1st EATF Survey XML

2.00

2.00 1.60

Average ranking Highest ranking Lowest ranking

1.38

1.17 1.14

1.20

(all)

10

23 May 2012

EXHIBIT II OPEN ALLIES LETTER TO IATA

15 July 2013 Mr. Tony Tyler Director General & CEO International Air Transport Association 33 route de lAroport 1215 Genve 15 Switzerland Dear Mr. Tyler, I am writing on behalf of Open Allies for Airfare Transparency to urge IATA to withdraw Resolution 787 on Enhanced Airline Distribution from further review at the U.S. Department of Transportation (DOT) so that IATA can launch productive discussions with other stakeholders in the airline travel distribution system on a more constructive and viable approach to this important issue. As you predicted in your original DOT filing, Resolution 787 has prompted a deep backlash across the travel industry on both content and process grounds. Open Allies and other key travel industry organizations were excluded from the discussions and drafting of Resolution 787, and our nearly 400 members are seriously concerned about its potential impacts. Thus, we urge you to withdraw this proposal and work with partners who distribute your members services including independent distributors and sellers of air travel, corporate travel departments, and travel trade associations to create and propose a broadly-supported new resolution. Should you agree to do so, we stand ready to work quickly and collegially to bridge our differences on these matters, and we believe we can find common ground by the end of the year. No matter how the opportunity emerges, we look forward to starting with a clean slate and working constructively with IATA should it wish to work toward the establishment of a common technological standard that will benefit consumers and all other stakeholders.

Andrew Weinstein Executive Director Open Allies for Airfare Transparency

Open Allies for Airfare Transparency 913 S Street, NW, Washington, DC 20001 202-667-4967 info@faretransparency.org