United Airlines cuts commissions for travel agents

Herbert G. McGann

Friday, Oct. 8, 1999 | 11:26 a.m.

United Airlines

United Airlines is a key player in the effort to bring additional gamblers to Las Vegas in order to fill the city's growing inventory of hotel rooms. United is the third-busiest carrier at McCarran International Airport here, trailing Southwest Airlines and America West Airlines. In August, United served 290,000 Las Vegas passengers, up 4.4 percent from August 1998.

CHICAGO -- In what could spur another round of industrywide cuts in travel agents' commissions, United Airlines announced it is reducing the fee it pays agents for selling tickets from 8 percent to 5 percent.

United, the nation's largest air carrier, expects the change, announced Thursday, to save $150 million a year.

Other airlines did not immediately respond to the announcement. The last three times United cut commissions, the other airlines eventually followed suit.

Travel agents denounced United's move, which is effective today and applies to both domestic and international tickets, as being anti-consumer.

"What's rising at United is the price the consumer will ultimately pay for the airline ticket," said Joe Galloway, president of the American Society of Travel Agents in Alexandria, Va.

United said it will pay agents a 5 percent commission for all tickets purchased in the United States for travel within the country, with a maximum payout of $50 for round-trip travel and $25 for one-way travel.

For international travel, the maximum pay out will be $100 for round-trip travel and $50 for one-way travel.

"Today's announcement is part of our continuing efforts to examine all facets of our cost structure," United Airlines Chairman and Chief Executive Officer Jim Goodwin said in a statement.

William Gallagher of Gallagher Travel Service Inc. in Chicago said the likely result will be that travel agents will charge fees for services they previously provided for free.

"For example, you call asking for the lowest fare from A to B, that will cost you X number of dollars," he said. "We haven't charged a fee in the past. There is no question we will have to now."

Travel agents sell about 80 percent of the airline tickets sold in the country, Galloway said.

"United is trying to force the cost of distribution onto the shoulders of consumers," he said. "Consumers will be forced to pay more because they won't have adequate comparative information that travel agents alone provide. Or they will have to pay more because the travel agent will be forced to charge more or raise service fees for crucial services that consumers seek from them."