Big LV airlines paying full fees to agents

Monday, Aug. 27, 2001 | 11:04 a.m.

SUN STAFF AND WIRE SERVICES

The top two airlines serving McCarran International Airport don't plan to cut commissions to travel agencies that book flights for them.

Spokeswomen for Southwest Airlines, Dallas, and America West Airlines, Tempe, Ariz., said Friday their companies will stick with existing policies on commissions to travel agencies.

The decisions come in the wake of four major airlines announcing last week plans to further cut commissions to agencies.

The nation's top four carriers -- American, United, Delta and Northwest -- announced they would reduce the caps on the amounts they pay to agencies from $50 for round-trip flights and $25 for one-way tickets to $20 round trip and $10 one way. The base commission remains at 5 percent for most airlines.

US Airways and its affiliated shuttle and commuter lines also announced Friday that they would join the major carriers in cutting commission caps.

Southwest Airlines, McCarran International Airport's largest commercial passenger operator, plans to maintain its current level of commissions for the rest of 2001. Southwest pays travel agents 10 percent on Southwest Vacations packages involving airfares and hotels, 8 percent on ticketless travel reservations and 5 percent on standard paper tickets. The company caps payments at $60 for round trips and $30 for one-way tickets.

Kristin Nelson, a spokeswoman for the airline, said the issue of travel agency commissions was reviewed by the airline and the existing policy was set in January. She said the company committed to sticking with those rates at least through the end of the year after making the commitment to the agents.

A spokeswoman for America West, McCarran's No. 2 carrier, said the airline would continue to pay a 5 percent commission to travel agents with existing $50 and $25 caps -- but the company is evaluating that stance.

Janice Monahan said today the airline is evaluating the economics of how many ticket sales the airline could lose if it cut commissions, against the savings commission cuts could result in.

Las Vegas-based National Airlines also told travel agents that it has no plans to cut commissions and will continue to pay 10 percent with no caps.

Dik Shimizu, a spokesman for National, said travel agents book about 70 percent of his airline's tickets.

"We look at it as an opportunity for an airline such as ourselves, a new entrant, to gain the support of what is undoubtedly the largest distribution system out there," Shimizu said. "The Internet has made some strides, but if you look at the numbers, travel agents are responsible for selling three out of four seats on all airlines."

Travel agencies nationwide denounced the cuts as anti-consumer while Wall Street analysts said the cost savings could help the ailing airline industry.

"The industry no doubt hopes that the new commission caps will shift even more traffic to lower-cost distribution channels (i.e. carrier Web sites)," Salomon Smith Barney analyst Brian Harris wrote in a two-page review.

Besides sustaining commission cuts, travel agents are losing customers by the day to Internet ticket outlets. In addition to airline Web sites, there are independent sites such as Travelocity, Expedia and Orbitz that offer self-service fare searches and online booking.

"The airlines have declared war against their distribution system, and we intend to make the public aware of this outrage,' said Richard Copland, president and CEO of the American Society of Travel Agents, an industry trade group.

ASTA has called the latest cuts a back-door price increase for air travelers and said it will complain to the Department of Justice and the Department of Transportation.