Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 22, 1995 TAG: 9502220079
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: SHANNON D. HARRINGTON STAFF WRITER
DATELINE: LENGTH: Medium
Travel agents are fighting back against airlines that recently announced plans to cap commissions. But Roanoke Valley agencies, wondering how to compensate for the loss of revenue, remained opposed to charging their customers for a service they have provided for free.
The commission cap, which eight major airlines have adopted in the past two weeks, will pay agents $50 for selling a ticket for a round-trip flight and $25 for one-way flights. The changes have left travel agents in an uproar. Before the caps, airlines were paying travel agents commissions of 10 percent of the value of every ticket they sold.
The American Society of Travel Agents, or ASTA, said Tuesday that it has filed an antitrust class-action lawsuit in Trenton, N.J., against the airlines that have announced commission caps. The organization also is seeking a restraining order to halt caps until the lawsuit is resolved.
The legal action began last Wednesday, when New Jersey-based Travel Network, reported by the Wall Street Journal as the second largest travel agency in the nation, filed suit against the airlines.
Booking airline tickets has traditionally been a free service for travelers, but the cap could force many agents to begin charging fees for the service. ASTA officials said 85 percent of all airline tickets are booked by travel agents.
"Issuing airline tickets is a service we have always provided for free," said Sol Ames, owner of the Christiansburg branch of Travel Agents International. "Now we're faced with a dilemma. How can we afford to provide airline tickets to our customers without adequate compensation?''
Lew Bishop, president of Roanoke's Travel Network branch, also is opposed to charging fees.
"Our commitment is to see that this issue remains a travel agent/airline issue and not compensate by passing charges on to the customers," Bishop said.
Bishop added that the commission cuts will mostly affect the agencies whose customers, such as corporate clients, buy higher-priced airline tickets.
Bill Thomas, president of Hopkins Travel Inc. in Roanoke, said that the commission cap could hurt agencies such as his because of that factor. Between 30 and 35 percent of Hopkins' business is for corporate travel, which often does not qualify for lower advance purchase rates and other discounts.
Thomas said that with the commission cap, he could lose up to 50 percent of the commission he normally would have made on the higher-priced corporate tickets. Some tickets, Thomas said, can cost as much as $1,000. And for every ticket over $500, he would lose commission.
"There are a lot of corporate tickets over $500,'' Thomas said.
by CNB