Share this story
Close X
Switch to Desktop Site

Agents Want 'Fair Share' Of US Airline Fares

Trade group claims 50,000 jobs could be lost; analysts say 'no way'

THESE are grim days for travel agents.

Faced with sharply lower commissions from most United States airlines since February, travel agents say their industry may lose tens of thousands of jobs and start charging customers for once-free services.

About these ads

But by limiting agents' commissions to $50 per round-trip domestic ticket versus the traditional 10 percent commission, America's struggling airlines may grow healthier and even be able to offer lower fares, say some industry experts.

''It will be favorable to the [airline] industry,'' says Leslie Hardin, an airline analyst at investment bank Smith Barney Inc. ''In the long run every cost cutting [measure] that has been made has always gone to the consumer.''

An industry publication, Travel Agent, called the commission changes a ''wake up call'' for a profession that has been relatively untouched while many money-losing airlines and airline manufacturers have eliminated thousands of jobs to cut costs. Since commissions represent about 11 percent of an airline's expenses, they are proving a ripe area for tightening.

Travel agents derive an average of 60 percent of their income from airline-ticket commissions, according to the American Society of Travel Agents (ASTA), the profession's largest trade group. Industry-wide that translated into $6.3 billion in revenue last year, according to the Airlines Reporting Corporation in Arlington, Va., which processes the overwhelming majority of agency tickets.

Travel agents are furious. Some staged a protest in Washington. Others harassed the airlines with false bookings. And on Monday, ASTA asked the Justice Department to file a restraining order on the airlines. And later this week, the ASTA plans to file an antitrust suit against the airlines alleging price fixing and collusion.

''It is their prerogative [to lower commissions], but for them all to come in [with a change] within two days is considered price signaling,'' says Jeanne Epping president of the 25,000-member ASTA. ''We think there was discussion before the fact.''

The airlines respond there is no merit to the charges.

About these ads

Ms. Epping also estimates, based on surveys with 7,400 of its members, that a typical travel agency will have to lay off one full-time agent or more per location. With 33,000 travel agencies in the US employing 200,000 people, that translates into a potential loss of nearly 50,000 jobs, Epping says.

Many disagree with this figure. ''That is wild hyperbole,'' says Con Hitchcock, a lawyer expert in aviation issues with Public Citizen, a consumer group in Washington.

''That's the kind of hysterical rhetoric one hears when any change is proposed.''

Many observers expect that travel agencies will adjust by charging for services such as counseling and planning extensive travel itineraries. But will the public keep calling if they have to pay? Experts say ''yes.''

''The travel agent should be the cheapest, should be the most convenient way to find out what's available on every airline instantly,'' said Ed Perkins, editor of the Consumer Reports Travel Letter published in Yonkers, N.Y.

The Monitor telephoned five New York-area travel agents and asked them to find the cheapest round-trip tickets for the same dates from New York to Tampa, Fla., and to Tokyo, Japan. Every agent came up with a different lowest fare to Tampa ranging from $238 to $376; four of these fares were higher than the price American Airlines quoted when called directly. Agents also quoted widely divergent ''best fares'' to Tokyo ranging from $935 to $2,235.

But Epping says, ''Travel agents are very busy. They work on a very slim line of profit. Unless in their judgment you're serious about traveling, they can't spend too much time just giving fare quotes.''

Ironically, consumer confusion about prices has greatly boosted travel-agency business since deregulation in 1978. By last year, travel agents issued 80 percent of all air tickets, up from 44 percent in 1978, says Dean Langdon, ASTA's assistant director of industry affairs.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.