Commission decision puts travel agents on defensive

Deirdre Newman

NEWPORT-MESA -- A decision this month by four major airlines to cut

travel agent commissions on most domestic tickets could be the death

knell for small travel agencies. And the ones that survive will probably

have to charge higher fees, some in the industry say.

“I would venture to guess that about 80% of the travel agencies under

$5 million a year will close their doors,” said Shirley Price, co-owner

of Newport Beach Travel in Corona del Mar.

On March 14, Delta Airlines was the first to nix commissions for

tickets issued in the U.S. and Canada to reduce costs, followed by

American, Continental and Northwest. Commissions had been 5% of the price

of a ticket, up to a maximum of $20. The airlines are banking on the

popularity of online travel sites, including their own, that circumvent

agent fees.

But don’t count travel agents out altogether because they still offer

a personal touch that online services can’t match, said Fred Addi, owner

of Sunflower Travel in Costa Mesa.

“Presumably, a good travel agent still has knowledge and expertise

that a consumer doesn’t have,” Addi said. “The fact that you have access

to something doesn’t make you an expert at that job. You can access a lot

of medical information online, but that doesn’t make you a doctor.”

The airlines cut commissions seven years ago from 10% to 7%, then

sliced them to 5% with a $50 maximum, and then reduced the maximum to $20

last year.

Agents have been fighting the dwindling commissions for just as long,

and many have already raised their fees to compensate.

Price said her company will immediately begin to lose $18,000 a month

because of the latest cut, prompting the three full-time employees to

forsake their expensive office and move into the co-owner’s home. The

company already tacks on a fee of $20 per ticket, which may soon increase

to offset the new loss, she added.

Margaret Argos, manager of Newport Mesa Travel Connection in Newport

Beach, predicted that agencies would be more prone to losing

businesspeople who have secretaries to take care of their travel than the

leisure traveler who may not have a computer at home or Internet

expertise.

Argos said her company raised its fees after the Sept. 11 terrorist

attacks and is not sure if they will be increased further.

While the airlines maintain that cutting commissions will save costs,

Price considers that to be a specious argument.

“The reason I don’t believe it is that they all have Internet sites,

and if you go on theirs, their tickets are at 10% reduced value -- that’s

our 10%. If they can afford to pay 10% on the Internet, why can’t they

afford to pay a travel agency?” Price asked.

In addition to their own Web sites, five of the major airlines -- the

four that have nixed most of the commissions plus United -- founded

Orbitz.com last year to sell tickets without agents. The Web site touts

the service as delivering “truthful, unbiased information. And one that

would offer convenient, one-stop shopping for low-priced air fares.”

The American Society of Travel Agents is continuing to lobby the

government to step in to say the airlines’ actions are preventing a

certain class of people from making a living, Price said.

* Deirdre Newman covers education. She may be reached at (949)

574-4221 or by e-mail at o7 deirdre.newman@latimes.comf7 .