The Australian Competition and Consumer Commission issued a decision today authorising* 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 ACCC's 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 agents. The conditions of the authorisation will ensure that the benefits arising from the agent program in its current form are realised and outweigh any anti-competitive detriment.
The 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.
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 its members in jointly determining many arrangements in the aviation industry, including fare setting, travel distribution and schedule coordination, for both passengers and cargo, IATA has cartel-like power.
"It is important that IATA's activities be reviewed on a regular basis given their anti-competitive potential and the dramatic changes that have occurred in the aviation industry over the past decade and are still ongoing".
Professor Fels said that in re-authorising 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.
He emphasised that an effective travel agent industry is critical in Australia as a means of ensuring competition between international airlines. While authorising the IATA travel agent program in its current form the ACCC is mindful that future changes to the program made by airlines could be potentially anti-competitive in their impact on competition between retailers of air travel (including airlines).
Professor Fels said that the next phase of the review will examine IATA's activities in the area of air cargo. This review will commence immediately following the receipt of an application from IATA. The air cargo review will not only look at arrangements between airlines and freight forwarders but also at IATA's involvement in setting tariffs for the carriage of air freight. The ACCC has received a number of complaints in recent months at the impact of changes in IATA coordinated tariffs on Australian air freight exports.
*The Trade Practices Act 1974 prohibits competitors agreeing to work together in a way that reduces competition. Authorisation provides immunity from court action arising from such agreements but can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any public detriment.