Travel agents question airline practices

Friday, June 7, 2002 | 11:13 a.m.

The travel agency industry, pummelled by airlines that quit paying ticket commissions, will challenge airline practices before a government commission next week.

Leaders of the American Society of Travel Agents will testify before the nine-member National Commission to Ensure Consumer Information and Choice in the Airline Industry when it conducts hearings in Washington Wednesday. Three commissioners are ASTA members.

Executives of the 24,000-member ASTA say following the elimination of agent commissions, their role has shifted from being partnering representatives of the airline industry to consumer advocates working on behalf of the traveling public.

"Airline service has become an oxymoron," said Richard Copland, president and chief executive director of Alexandria, Va.-based ASTA. "We've gone from being agents of the airlines to advocates of the consumer."

The reason for the shift is the hit the industry has taken since 1994, when most of the nation's major airlines began reducing commissions to agents. By March, most of the major airlines had eliminated those commissions, which had been reduced to 5 percent.

Earlier this week, Frontier and Alaska airlines, which both offer service to Las Vegas, announced they were eliminating their payment of commissions.

The cuts have been devastating to the industry, especially to small mom-and-pop travel agencies. ASTA officials said the number of agencies has fallen from about 35,000 in 1994 to 27,000 in 2001.

The airlines said eliminating commissions is a cost-cutting measure for an industry that has lost more than $3 billion this year.

About 400 travel agents are meeting in Las Vegas through Sunday for ASTA's 2002 Western Regional Conference. ASTA has three regions and agents from west of the Mississippi are meeting for the four-day event that features seminars on destinations, panels on industry issues and a trade show with just over 100 exhibitors.

William Maloney, executive vice president and chief operating officer of ASTA, is expected to be the first witness before the commission when it begins gathering testimony next week.

"The conclusion is inescapable," Maloney said. "(The airlines) clearly have done everything in their power to eliminate us."

Maloney said in addition to steadily cutting agent commissions, airlines have increased costs to agencies, including access to airline computer systems. Internet travel sites and the airlines' own sites are being pushed by the airlines instead, which Maloney equated to "teaching people how to pump their own gas."

But the airlines, he said, haven't been straightforward about ticket pricing and will rarely steer a customer toward the best travel deal.

"At least when you pump gas, you can select the octane level and choose between full service and self-serve," he said. "But when customers try to buy their own tickets on the Internet, they're being led into a pricing jungle. We know. We live in that jungle every day."

ASTA's favorite target in the battle against the airlines is Orbitz, an Internet company formed last year by United, Northwest, Delta, Continental and American airlines -- called "the Darth Vader of the industry" by Copland.

Maloney said he will tell the commission that most airlines are violating antitrust laws with collusive tactics. But he said he would be careful to explain to commissioners that not all airlines are using those tactics.

Las Vegas could be the beneficiary of travel agents who book tickets on the airlines that still pay commissions to agents. Southwest Airlines and National Airlines, two of the five largest carriers serving McCarran International Airport, still pay commissions to agents and Maloney said agents would be motivated to book travel on those airlines.

ASTA says Las Vegas is considered the No. 1 domestic destination by the organization's members.