ANALYSIS: May 28 2009

PaxIS: will IATA get the message?

The news that Amadeus has won a court case to stop the International Air Transport Association (IATA) using its electronic ticketing information for commercial purposes marks a major milestone in the battle against PaxIS.

This battle has been waged by many sections of the industry, notably travel management companies, GDSs and associations, since IATA introduced this controversial product about two years.

On its website IATA describes PaxIS - its passenger intelligence services - as "a powerful and essential market intelligence tool for air travel analysis."

It adds that this product, developed by its Business Intelligence Service, "is the most comprehensive airline passenger market intelligence database available today, with more accurate, reliable and affordable data captured through IATA Billing and Settlement Plan."  

What it does is provide information on the agency, the country and the region of ticket issue, the point of origin airport, the connecting airport, the final airport, fare category, fare value, month of ticket issue and month of travel.

It is a crucial step on from the Marketing Information Data (MIDT) arrangements, whereby GDSs sell information on airline bookings to interested parties. With PaxIS, what IATA is selling is details of flights actually taken and the fares paid. In an industry where bookings frequently chop and change, this is far more vital information.

GDSs sell MIDT to interested parties to see how much of the business of a corporate was going to a competitor and how much it was getting on particular routes. But the information, though interesting, was not 100% accurate.

 PaxIS is accurate and it contains not just details of flights, but also how much has been paid.

Altogether this is vital information and no doubt attracts a price to reflect that.

But the fears of many in the industry go deeper than this.

The new European Code of Conduct for CRSs, finally drawn up after years and years of debate, specifically forbids the identification of travel agents. But IATA indicated it took the view that the relevant clause of the Code did not apply to airlines. The Association was disabused of this idea when a UK Labour MEP, Brian Simpson, a member for north west England, directly asked the Commission if this was the case.

The reply was that the relevant clause, 7.3, did cover airlines. What the EC, in announcing it ruling, said was that the clause is "very clear on the protection of business data."

It added: "It provides that any marketing, booking and sales data resulting from the use of distribution facilities of a CRS by a travel agent...shall include no identification either directly or indirectly of the travel agent."

 Information could only be released if the CRS and agent agreed to it. In case anyone did not get the point, the EC added that the "protection of business data was a fundamental point of the Code of Conduct."

IATA's stance on this was ambiguous. It said that it would always abide by legal obligations but added that it regarded privacy as a concept that applies to individuals and not to commercial units.

Now the ruling by the International Chamber of Commerce Court of Arbitration in Amadeus' favour seems to put the matter beyond doubt.

The actual judgements by this court are confidential to the parties involved but Amadeus, in a statement, said the verdict was that the use of its data by PaxIS "constitutes a breach of its contractual agreements with Amadeus and also infringes Amadeus' rights under the EU Database Directive." 

It added that the court had also "ordered IATA not to use any ticketing information transmitted by Amadeus for the purpose of developing, marketing and selling PaxIS, or any other similar reports, or for any purpose, except for the orderly operation of the Billing and Settlement Plans.

"This decision fully supports the position that Amadeus has consistently taken, that the conduct of IATA, in using Amadeus' ticketing information in its PaxIS product, infringes Amadeus' rights."

While Amadeus said that IATA was ready to abide by the decision, the Association itself was unsurprisingly but possibly understandably, not making any comment.

Unless it does make its position clearer, at least to the industry if not the press, it will be facing a very similar court case with Sabre in Canada. This is due to be heard "very soon", Sabre said, adding that it was "optimistic."

What all this means for the future of PaxIS is quite unclear. Will IATA be forced to stop using information from Sabre, the Travelport two GDSs Galileo and Worldspan as well as from Amadeus?  If that is the case, and it does not look an unreasonable assumption, would PaxIS have much value left? And would many in the industry actually mind this?

This at the bottom of it all may be IATA's problem. Its aloofness and sheer determination to run as much of the industry as it can for the benefit of its airline members do not serve it well. All its good work on other aspects like safety, IT and carbon emissions is devalued by its stance over products like PaxIS.

Mike Platt, former industry affairs spokesman for Hogg Robinson Group and now the author of a  series of outstanding articles in ABTN, said in his Christmas Comment last year that one of his seasonal wishes was that IATA joined the rest of us in the 21^st century.

This may be a touch optimistic but what would help is if the Association accepted it was just one of many players in the industry, not its supreme power. And talking to other players also helps.