PHOTO: The DOT's tentative approval of IATA’s proposal could lead to a new airline ticket distribution system. (Courtesy of Thinkstock)

The U.S. Department of Transportation (DOT), in a long-awaited ruling, said it has tentatively approved an International Air Transport Association (IATA) proposal that aims to modernize the marketing and sale of airline products. IATA says its plan would enable airlines, travel agents, global distribution systems (GDSs) and consumers to “speak the same language” in their communications with each other through a common data transmission standard.

That would pave the way for a so-called New Distribution Capability (NDC) that would fundamentally change the way airline bookings are made. The DOT said its tentative approval includes several safeguards designed to protect privacy and ensure competition and consumer choice. It would also make clear the voluntary nature of the standard and its availability to all airline industry participants.

The DOT’s move comes after nearly two years of debate among airlines, global distribution systems (GDSs), travel agencies, travel agency groups, consumer advocacy groups and business travel organizations. IATA last year filed its original request for DOT to endorse its so-called Resolution 787 to create a new software language for airline booking systems.

IATA initially said that its filing did not require DOT approval, but it ran into major objections from travel agencies, business travel groups and consumer groups. These groups said IATA’s NDC would violate consumer privacy and lead to increased costs for consumers, travel agencies and corporate travelers. But these groups were ultimately brought into IATA’s talks to develop NDC last fall, and they, for the most part, had urged DOT approval of Resolution 787.

According to the DOT, the absence of a common, up-to-date data transmission standard has meant consumers must check multiple sources to identify competing fare options and information about the comparative cost of additional ancillary services, such as extra leg room, Wi-Fi, and advance boarding, many of which have additional fees, that air travelers and travel agents view as critical when deciding which fare to buy.

The DOT said the new data transmission standard to be developed under the IATA proposal would help the development of systems to allow consumers and travel agents to readily access the information they seek, and make meaningful comparisons among all the choices in the marketplace, without necessarily having to check multiple sources. The new standard would also enable travel providers to develop systems to better tailor their offerings to the needs of individual travelers with customized price quotes including not only the air fare but also ancillary services.

The DOT said it has tentatively found the proposed communication standard would facilitate the development of systems that would create greater consumer access to more and better fare information. It would also give the industry tools to better respond to consumer demand and create enhanced efficiency and more competition in the marketplace.

When IATA initially submitted its proposal, a number of commenting parties, including ASTA, Business Travel Coalition, Global Business Travel Association and consumer advocacy groups, raised concerns that consumers would need to provide personal information that could create privacy issues and undermine the public benefits of the proposal.

IATA, together with many of the parties that had initially raised objections to the proposal, later filed a joint motion asking the DOT to approve the proposal subject to new conditions addressing consumer privacy and various other concerns. The department’s tentative decision acknowledges these steps and further strengthens safeguards to protect consumers.

In addition, the DOT said it has added several consumer safeguards ensuring that those shopping for air travel would not be required to disclose personal information. The DOT also specified that airlines and ticket agents would be obligated to follow their published privacy policies on the sharing and storing of personal information.

The DOT also said that consumers’ ability to shop anonymously must not be undermined by new data transmission standards for communications and marketing practices. While an airline may request that consumers provide certain information voluntarily, those consumers cannot be required to provide that information in order to receive an airfare or ancillary product quote. In addition, all of the DOT’s regulations involving airline and ticket agents’ displays of fares and ancillary products would continue to apply.

Business Travel Coalition (BTC) said it applauded the DOT”S tentative decision on the IATA’s application to DOT for approval of its Resolution 787. On the other hand, it said it is still studying in detail the numerous and complex provisions in the department’s decision regarding Resolution 787.

BTC said DOT has protected competition and consumers by imposing several important conditions on its approval of Resolution 787. It said consumers will benefit from greater price transparency from the DOT’s proposal to require airlines to provide real-time pricing of core ancillary services (e.g., for checked bags) wherever they sell their tickets. But BTC also said DOT must require that ancillary fee information is disseminated to travel agents in an efficient manner so it is truly usable by agents. It urged DOT to ensure that consumers can purchase these services from travel agents at the same time as an airline ticket.

The DOT said all parties now have until June 11, 2014 to submit comments in response to the tentative decision at regulations.gov, docket number DOT-OST-2013-0048. Answers to those comments will be due no later than June 20, 2014.