Digital Tech and Market Forces Benefit Travelers, Expert Says
WASHINGTON, D.C. - The Department of Transportation (DOT) should stop stifling the travel distribution industry with “detailed and pervasive controls” on the Computer Reservation System (CRS), and allow market forces to promote consumer-friendly improvements. That is the view of Progress & Freedom Foundation law and economics expert William F. Adkinson, Jr., who is also calling upon the DOT to take immediate antitrust action in the Orbitz case.
In official comments filed in the Department’s rulemaking proceeding to modify its CRS regulations, Adkinson writes that DOT continues to rely on mistaken "conjectures regarding potential for market power and anticompetitive effects" and "underestimates the strength of disciplining forces in the market." He cites "the bargaining strength of airlines, the rivalry among CRSs for travel agents, and the competition among travel agents to serve air travelers," emphasizing "emerging developments such as the rise of Internet distribution and reduced airline control of CRSs."
He writes that CRSs have "revolutionized air travel distribution," to consumers' advantage, and that the explosion of online distribution further extends the benefits of digital technologies. The DOT-adopted regime “poses a multitude of regulatory risks, including becoming obsolete due to marketplace developments, imposing unintended consequences, and skewing competition between regulated and unregulated sectors.”
To further enhance competition and benefit consumers, DOT should “move forward expeditiously” to eliminate Orbitz Most Favored Nation provision, which Adkinson maintains “poses anticompetitive risks without procompetitive justification and thus violates the antitrust laws.” In a recent study, “Orbitz Should Still Pop Up on Antitrust Agencies’ Radar Screens,” he takes aim at MFN, which effectively ensures that Orbitz can offer all members’ publicly available fares and match special deals offered by competitors. He and PFF colleague Thomas M. Lenard wrote an article featured in ANTITRUST, a journal published by the American Bar Association, “Orbitz: An Antitrust Assessment,” as well as a paper, “Revise Orbitz’s Flight Plan: Serious Competitive Risks Outweigh Questionable Benefits.”
The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy. The Foundation is a 501(c)(3) nonprofit organization founded in 1993.