The Australian Competition and Consumer Commission issued a draft decision indicating that, subject to comments from interested parties, it proposes to authorise* the travel agency program of the International Air Transport Association (IATA), the industry association for the world's international airlines.
Under the program the world's international airlines determine the means by which air travel is distributed and sold through travel agents.
The draft decision represents the first stage of a review of authorisations granted to IATA for all its activities in the mid 1980s. The review was initiated following complaints from the Australian Federation of Travel Agents and the Australian Federation of International Forwarders. The next phase of the review will examine IATA's activities in areas other than travel agents with a particular focus on air cargo and agreements between airlines on fares.
ACCC Chairman, Professor Allan Fels, noted that most airlines in the world are members of IATA, and that IATA member airlines account for more than 95 per cent of international scheduled air traffic to and from Australia.
"Given IATA's high industry coverage and the involvement of it s members in jointly determining many arrangements in the aviation industry, including fare setting, travel distribution and schedule coordination, for both passengers and cargo, IATA had cartel-like power.
"It is important that IATA's activities be reviewed on a regular basis given their anti-competitive potential. Since IATA's activities were originally authorised in the mid 1980s there have been dramatic changes in the aviation industry including the deregulation of the aviation industry in Australia, the advent of airline alliances, the impact of new Internet technology in reservation and sales systems, and the liberalisation of air traffic routes. It is important that IATA's activities be reviewed against the background of these developments".
Professor Fels said that in proposing to authorise the IATA travel agency program the ACCC recognised that the program provided significant benefits, enabling agents to represent multiple airlines and providing an efficient system for acquitting ticket payments between agent and airlines.
While proposing to authorise the IATA travel agent program in its current form the ACCC considered that changes to the program could be potentially anti-competitive in their impact on competition between retailers of air travel (including airlines). Professor Fels said that an effective travel agent industry was critical in Australia as a means of ensuring competition between international airlines.
The ACCC's proposed authorisation of the travel agency program is conditional on IATA taking action in a number of areas including reviewing the conditions of accreditation for travel agent and facilitating the processing of ticket refunds. These conditions will ensure that the benefits arising from the agent program in its current form are realised and outweigh any anti-competitive detriment.
*Authorisation provides immunity from legal action for conduct that might otherwise breach the Trade Practices Act 1974. The ACCC can grant immunity only where it is satisfied that the detriment of the anti-competitive conduct in question is outweighed by accompanying public benefit.