News this morning that UK-based online travel agency TravelRepublic did not fall foul of guidelines over the selling of package holidays has the potential to unlock a raft of innovation in the online travel space and finally break the status quo.
The case was brought about the Civil Aviation Authority after it argued TravelRepublic should have purchased an ATOL bond - a system for financial protection in the event of a travel company going bust - when customers bought flight+hotel package products on the site.
TravelRepublic, a relatively new player on the UK travel scene which has leapfrogged into a strong position in recent years ahead of the likes of Ebookers and Opodo in terms of web traffic, stuck its heels in and told the CAA it would meet them in court.
Fast forward almost a year - there were numerous hearings throughout 2009 - and the court has thrown out the CAA's charge.
The outcome of the case is likely to trigger a number of issues:
- There will be plenty of hand-wringing from existing travel companies who believe TravelRepublic are operating unfairly (primarily because they haven't spent large sums of money buying the annual ATOL bond).
- The CAA may appeal the decision.
- Questions will return once more over the relevancy of financial protection and regulatory bodies such as the CAA.
But there is an equally interesting area to consider.
Some argue the ATOL scheme has prevented startups from competing in the package holiday/bundling space simply because they do not have the funds to buy the protection programme.
In normal circumstances, entrepreneurial companies compete against those already operating by innovating with their business model.
However, as Tnooz node Alex Bainbridge suggests, the ATOL system "stifles innovation as it forces entrepreneurs to compete against incumbents", primarily because they can only compete on the execution of what they are allowed to do legally.
The removal of the barriers to entry, as a result of the CAA-TravelRepublic case, means that travel startups who in the past were unable to compete because they were locked into a regulatory and arguably restrictive framework are now potentially free to challenge the status quo.
Some may argue that it is the consumer who will ultimately suffer if a travel firm goes into administration and customers are not protected by an insurance scheme.
Companies such as TravelRepublic saw this and simply introduced an insurance scheme of their own, bypassing the need to buy an ATOL protection bond.
The hand-wringing will continue, no doubt, but is this simply because an upstart start-up is challenging the rules and regulations imposed long before the web opened up new opportunities and allowed wannabe innovators of business models to come in?
Expect this to roll and roll.