Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 11, 1995 TAG: 9502140022
SECTION: BUSINESS PAGE: A4 EDITION: METRO
SOURCE: LOS ANGELES TIMES
DATELINE: LENGTH: Medium
The assault on the nation's travel agencies intensified Friday as two more big airlines, American and Northwest, joined Delta Air Lines in imposing caps on the commissions paid to agents for domestic tickets. The change will take effect Feb. 27.
The agencies were outraged, and some said the limited payments would push many of the nation's 45,000 agencies out of business. ``I don't think I've been more scared in my [24] years in the travel business,'' said Daniel J. Marinoff, owner of LTS Travel Service in Culver City, Calif.
The airlines said the caps, which replace the agents' conventional 10 percent commissions, are needed to contain costs as widespread low fares pinch airline earnings.
``The airlines are signaling very clearly that travel agency commissions, as we've known them in the past, are going to change,'' said Travis Tanner, chief executive of Minneapolis-based Carlson Wagonlit Travel, the world's second-largest network of travel agencies.
``Obviously, we don't expect the agents to give us a bouquet of flowers,'' said Delta spokesman Todd Clay. ``But this was something we had to do. Those commissions cost us $1.3 billion a year - our third-largest expense behind payroll and fuel.'' The move is risky because travel agents typically write about 80 percent of the tickets for the major airlines.
Travel agents in Roanoke and Blacksburg said they think the airlines should have looked elsewhere to cut costs.
Agents, who don't charge consumers for their services, depend on the commissions for income, said Gene Swartz, president of Travelmasters in Roanoke. Cutting commissions is "cutting into the heart of where travel agents live," he said.
Swartz said the airlines should have looked to other areas, such as reducing the ticket discounts they give big corporations, before cutting commissions.
The three airlines will pay a maximum $50 commission for a round-trip base fare of more than $500, and $25 for a one-way ticket with a base fare in excess of $250. Thus, an agent writing a $1,200 ticket would get the maximum of $50, rather than the $120 he or she would have been paid under the old arrangement.
Yolanda Farr, manager of Oak Tree Travel in Los Angeles, said her firm and others will try to force the carriers to back down. Whenever her agents can find more than one airline to suit a customer's needs, she said, ``we will sell away from any airline that does not pay us the proper commission.''
Staff writer Greg Edwards contributed to this story.
by CNB