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CONTACT: Patrick Ross
March 15, 2005
(202) 289-8928
DOT Regulation of CRS is Overreach
PFF Files Amicus to Protect Digital Technology

WASHINGTON D.C. - The court should view very warily U.S. Department of Transportation claims that it possesses the legal authority to threaten future regulation of computer reservation system (CRS) operators, The Progress & Freedom Foundation said today in an amicus brief filed with the U.S. Court of Appeals, D.C., in the case of Sabre v. DOT. The case will determine whether and how these regulations will continue to govern the use of digital technology, including Internet distribution, in this industry.

PFF Senior Fellow Randolph May, director of Communications Policy Studies, and PFF Regulatory Counsel and Research Fellow Adam Peters joined with the Competitive Enterprise Institute's Sam Kazman in authoring the brief. By ignoring Congress' clear delegation of regulatory oversight of CRSs to the Federal Trade Commission, the brief argues, the agency "has implicated its self-interest in an expansive jurisdictional interpretation of its authority in a way that threatens to hamper further innovation and its resultant gains in consumer welfare." The tremendous growth of online travel reservations demonstrates a competitive market that succeeds in part due to a lack of unnecessary regulation.

CRSs play a central role in the market for air travel, collecting airline fare and flight information so that travel agents and travelers can find the best available itinerary. These technologies have enabled travelers to take advantage of the increased availability and affordability of air travel resulting from airline deregulation. DOT traditionally regulated CRSs because they were owned by airlines, but now these services -- essentially wholesale information aggregators -- are for the most part independent businesses serving online travel agencies and airlines on a contract basis. The three largest CRSs -- Sabre, Galileo and Worldspan -- are completely independent. The PFF brief argues that there is no longer any argument for DOT jurisdiction, and that the threat of that jurisdiction could stifle e-commerce. DOT has declared its oversight regarding CRSs now by defining them as "ticket agents" under the Federal Aviation Act.

The brief also argues that DOT's potential regulation of information dissemination systems raises serious First Amendment issues, and a temporary ban on CRS display bias failed to meet court criteria regarding government regulation of speech. The U.S. Supreme Court has found that when dealing with the potentially misleading effects of certain speech, mandatory disclaimers are far more preferable than outright bans.

PFF filed comments during the DOT rulemaking, which can be found here and here.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation