AP and staff reports

Travel agents nationwide temporarily closed up shop on Thursday to protest the airline industry’s latest reduction in commissions paid to them, a change that has already resulted in more expensive booking fees for their customers.

Friday, August 31, 2001

Travel agents nationwide temporarily closed up shop on Thursday to protest the airline industry’s latest reduction in commissions paid to them, a change that has already resulted in more expensive booking fees for their customers.

&uot;We’re out there on the streets trying to protect consumers because the airlines raised the prices on tickets in a backhanded manner,&uot; said Richard Copland, president of the American Society of Travel Agents, which asked some 15,000 travel agents to honor the two-hour protest between 1 p.m. and 3 p.m. EST.

Copland said the next step for his organization is to petition the Justice Department for limited immunity from antitrust laws in order to meet collectively and decide on a long-term response to the airline industry’s action.

American Express Co. and Carlson Wagonlit Travel, the nation’s two largest travel agencies, urged their franchisees not to shut down out of respect to customers, but hundreds of independent travel agents picketed at airports in Denver, Kansas City, Los Angeles, Newark, New York and Washington.

Sally Chesterman, a veteran travel agent for Carlson Wagonlit in Albert Lea, said her office decided not to participate in the protest, but only after serious consideration.

&uot;We had a talk about it, and we wrestled with it,&uot; Chesterman said. &uot;But ultimately, we decided it would do us no good to confuse our customers. Most travelers know nothing about this, and we’re pretty busy right now.&uot;

Chesterman said the major airlines are making it hard on travel agencies, but protests probably wouldn’t have much effect on the situation. She was not aware of any agencies in the area that participated in the protest.

&uot;Personally, I don’t see what difference closing down for two hours is going to make,&uot; she said. &uot;I want the general public to know about what the major airlines are doing to travel agencies, but I don’t want to miss customers because we’re busy protesting.&uot;

Galileo International Inc., which runs the nation’s second-largest electronic reservation system, said there was no noticeable change in the number of flights booked over its network during the protest.

The decision to lower travel agents’ commissions on domestic air travel bookings was initiated by American Airlines last Friday and was soon mirrored by its competitors.

It was the sixth time since 1995 that airlines have collectively lowered the cap or reduced the base rate on commissions to travel agents and illustrated a broader industry strategy to try and chip away at distribution costs.

Financial incentives such as extra frequent flier miles have been offered to passengers who buy directly from the carriers or over the Internet, both of which are cheaper channels through which tickets can be issued. After labor, fuel and aircraft, ticket distribution is the fourth largest expense for the industry.

Under the new airfare commission structure, travel agents will receive a maximum of $10 for booking a one-way ticket and $20 for a round-trip for all travel within the United States or Canada, instead of $25 and $50, respectively.

The change, which analysts say could save the industry upwards of $350 million a year, comes at a time when major carriers have sustained huge losses because of less spending by corporate travelers and higher costs for labor and fuel.

Travel agents were quick to denounce the commission changes and many have already responded by increasing the transaction fees they charge leisure travelers.

Outlets owned and operated by American Express increased their per-ticket fee to $25 from $20, with a cap at $60 instead of $50. Licensed franchisees of the New York-based company have the freedom to adjust fees however they see fit.

Carlson Wagonlit altered its fee structure to $25 for each domestic ticket and $40 for each international ticket. Before the airlines’ latest action, the fee was $20 across the board.

Both agencies said large corporate clients will not immediately be affected, but that the loss in revenue from the airlines is likely to be passed along the next time they negotiate a contract.

&uot;Ultimately, it’s a price increase to the corporate customer, too,&uot; said American Express spokeswoman Melissa Abernathy.

&uot;We try on behalf of our huge customer base to lean on the airlines, but in this economic environment it’s not having much impact,&uot; Abernathy said. &uot;It really shows where the balance of power is in the negotiating environment.&uot;

Abernathy said the long-term goal of the airlines appears to be to put travel agents out of business altogether so that they can charge higher prices to consumers.

David Stempler, president of the Air Travelers Association in Washington, was more sympathetic of the airlines’ systematic approach toward reducing distribution costs and said the changes should not necessarily be seen as a bad thing for consumers.

Stempler argued that commissions to travel agencies are factored into airline ticket prices and, therefore, the growing legion of passengers who purchase their tickets over the Internet are indirectly paying for a service they do not use.

&uot;Why should those people who do not use travel agents have to pay for it?&uot; Stempler said. &uot;And if people really need the service and benefits that a travel agency provides, then they ought to be willing to pay for it.&uot;

The airlines have refused to comment on the commission changes, which they announced separately in press releases throughout the week.