Jewish World Review July 22, 2002 / 13 Menachem-Av, 5762

David Jones

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Consumer Reports


Airlines, clients fight over data privacy

http://www.jewishworldreview.com | WASHINGTON (UPI) A coalition of travel industry firms and corporate airline customers may seek a federal investigation into demands made by Continental Airlines, United Airlines and Northwest Airlines to hand over sensitive employee travel data to an Albuquerque, N.M., firm that analyzes compliance with corporate airfare contracts, a coalition representative told United Press International.

The newly-formed group, called the Data Advisory Board, said thousands of U.S. companies are being forced to divulge names, pricing and other private data to the Prism Group Inc. in order to qualify for corporate travel discounts from the three carriers.

Several companies that refused to hand over their data to Continental lost airfare contracts worth millions of dollars in savings. At the same time, rival carriers have threatened to invalidate the contract of any customer that hands over confidential information to Prism Group.

"It would be helpful if the government evaluated these new requirements in light of acceptable contract practices and data privacy issues," Susan Hopley, executive vice president of TRX Data Services in McLean, Va., and a co-founder of the group, told UPI.

The coalition, which includes Bristol-Myers Squibb, PricewaterhouseCoopers and Hewlett-Packard Co., wants to develop an industry-wide standard of seven data elements for corporate contracts, and is seeking input from other travel industry officials before making any formal request to the government, Hopley said.

However, travel attorney John Caldwell in Washington, D.C., said the Department of Justice, the Department of Transportation or the Federal Trade Commission would be the most likely candidates for any review. "Those three agencies have potential jurisdiction over this," Caldwell told UPI.

Caldwell explained there could be a legal argument for airline collusion if a single third-party company has competitive pricing information from several airlines. But both airline and Prism executives said steps have been taken to "mask" the data to prevent confidential information from leaking out.

"We're very cognizant of the alleged problems with (confidential information) prior to us getting involved with the program," United spokesman Chris Braithwaite told UPI.

Northwest and Continental officials said their data are masked as well.

DOT spokesman Bill Mosley said the agency does have oversight over "unfair methods of competition" as well as "deceptive practices", such as an airline or agent of an airline breaking a promise to reveal confidential information. However there have been no contacts between the coalition and government officials to date, Mosley told UPI.

The controversy first erupted more than a year ago, after Continental Airlines launched a program called Corporate Insight. Under the program, Continental offered lucrative airfare discounts to corporations in return for reaching certain market share hurdles.

In order to get the maximum discount, sometimes 30 to 40 percent off a published fare, companies had to supply Prism with detailed information about employee travel, including individual names, details on individual flight segments and revenue flown on rival carriers.

Several prominent companies, including Johnson & Johnson, initially refused to comply with the data handover and walked away from the Continental discount. The outcry forced Prism to "mask" some of the data so Continental could not see certain information, but some corporate customers suspect the information can be extrapolated from aggregate fare data.

"I don't think any company wants to play Russian roulette with their data," Kevin Iwamoto, who manages airline contracts for Hewlett-Packard Co. and is president of the National Business Travel Association in Alexandria, Va., told UPI.

Iwamoto said companies not only are concerned about leaking confidential information about employees, but they also are worried that any airline working with Prism could use the data to calculate how much a company pays for tickets on a competing airline. For that reason, Hewlett-Packard also has refused to hand over its data to Prism.

"The airline industry is cut-throat competitive and we don't have the means or desire to use data from Corporate Insight for any purpose other than helping our customers and beating 'Brand X'," Dave Hilfman, vice president of multinational sales and revenue programs for Continental Airlines, told UPI.

Jim Lennon, corporate travel leader at PricewaterhouseCoopers in Stamford, Conn., said United wants his company to hand over data to Prism under the airline's new corporate solutions program. The company spends about $450 million a year in travel, making it one of the largest corporate travel accounts in the U.S.

Lennon told UPI he and other PricewaterhouseCoopers officials expressed concerns over handing this data over to Prism, and rival carriers like Delta Air Lines threatened that the company may be in breach of its corporate airfare agreement if it handed over confidential information to Prism. "Why does the airline need to know how much I'm spending with the other carrier?", Lennon asked.

PricewaterhouseCoopers officials have talked with United about the issue, Lennon said, adding he believes a compromise can be reached with his company -- although he said he wonders about companies with less financial clout.

Prism President Michael Whitesage said corporations have no reason to fear the loss of personal or competitive travel data, as his company meets the more stringent personal data directive enacted by the European Commission, called Safe Harbor.

"I welcome the scrutiny," Whitesage told UPI. "If there was a challenge (to Prism) the competing airlines would have done it." He said United initially sent letters to all of its corporate customers warning them against participating in Corporate Insight, but the airline turned around and later launched its own program.

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