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Small airlines support agent commissions
©Associated Press NEW YORK -- Sensing an opportunity to increase business, many smaller airlines have not joined the country's major carriers in eliminating per-ticket commissions to travel agents. While it remains unclear how long they can afford to hold out, executives at lower-cost and mainly regional airlines are hoping to boost ticket sales through the small travel agencies that depend heavily on the commissions. "The industry has historically referred to travel agencies as partners, even as they've been bludgeoning them with commission cuts. We like to think we walk the talk," said Michael Conway, chairman and chief executive of National Airlines, which pays a 10 percent commission for each ticket sold. If the plan works, carriers such as Air Tran Airways, Frontier Airlines and National will steal market share from major carriers serving Atlanta, Denver and Las Vegas -- their respective hubs. All else being equal, "I will push Air Tran more than I push Delta, but I've done that for years because they are an agent-friendly airline," said Dennis Fenton, owner of Your Travel Connection in Albany, Ga. Even so, Fenton said 70 percent of the tickets he sells are for Delta Air Lines, which competes with Air Tran in dozens of cities east of the Mississippi River, but offers greater frequencies to more destinations. Cutting costs every way they can, the country's biggest airlines last week ended the decades-old tradition of paying per-ticket commissions. Analysts say it could save the industry as much as $1-billion a year. The move could force many smaller travel companies to merge or go out of business. It will do little harm to larger agencies, which get other compensation from the airlines for meeting certain sales targets. These incentive-based payments, known as "override commissions," are frowned upon by consumer advocates, who say travel agents should be required to disclose any special agreements they have with a particular airline. "A lot of small carriers can't afford to play the override commission game," said Lowell Miller, a marketing executive at Frontier. They also have smaller advertising budgets than the leading airlines, he said. Nevertheless, analysts said low-cost, low-fare carriers have benefited in recent months from the frugality of travelers and the schedule cuts made by major airlines after Sept. 11. Voids left behind in cities such as Baltimore, Denver and Los Angeles have been filled by Air Tran, Frontier and Southwest, respectively. Tiny travel agencies said they would, while trying to keep customers happy, do all they could to promote airlines that pay commissions. "We try and support those who support us," said Dale Colson, president of Travelstar Inc. in Westport, Conn. While they appreciate such expressions of support, executives at smaller airlines said they will monitor travel agents' sales to determine whether the commissions are, in fact, a worthwhile expense. "We just have to see if it works in the long run," said Tom Vick, chief marketing officer at Midwest Express of Oak Creek, Wis.
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From the Times Business report Robert Trigaux
From the AP
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