NEW YORK -- It's been a year since most U.S. airlines took their
base commission rates to zero, and for agents it has not been a
good year.
However, that dreary take on events isn't just about airline
commission policies.
As much as anything, the unpleasantness of the last 12 months
reflects the U.S. economy and threats of terrorism and war.
And the vanishing commission is only one reflection of an
overall deterioration in an airline-agent relationship marked by
the elimination of "waivers and favors" and outright intransigence
in responding to agent needs.
For now, agents generally see their nonair suppliers as partners
"still willing to work with us," though there is unease about what
those suppliers might do later with commission cuts or alternative
distribution sources.
A nonevent?
Alan Hale, CEO of Adventure Travel in Birmingham, Ala., an $80
million mostly corporate agency, believes going to zero was a big
mistake for the airlines but "a nonevent for most agencies." He
concedes, however, that the resulting increases in agency service
fees "did push another small percentage of the corporate travel
side to direct bookings."
Like many agents, Hale uses consolidators and is vigorously
putting clients on his preferred carriers when that works for
customers.
In the new world, he said, employees have a better understanding
that they benefit, too, when moving share to specific airlines.
Hale offers weekly feedback to staffers on their results for
preferred suppliers.
Most agents interviewed said they use consolidators when
practical. Other revenue enhancers include "trading" business with
other agencies so each can show good results with a preferred
carrier or, also when practical, focusing on smaller carriers that
still pay commissions.
Special offers
Agents questioned by Travel Weekly said they aren't too
responsive to the occasional commission bonuses that focus on
specific products or services, usually because those deals aren't
widespread.
The big exception was Jeffrey Austin, president of the $100
million, largely corporate Austin Travel in Melville, N.Y. Austin
tries to take advantage of "every special commission offer we can
find."
He said he is talking with a number of other retailers about
establishing a joint "brokerage desk," where a central group of
staffers would look at all the agencies' bookings with a view to
finding suitable alternatives that produce more income.
But other agents see the temporary commission offers as too
fleeting to be practical.
Linda Robison, president of the $4.2 million leisure agency
Academy Travel in Colorado Springs, Colo., said special commission
offers are hard to track.
On the other hand, she said, if a supplier offers a bonus to
book on the Web, "we'll do that," or if a carrier wants to use
dollars to promote service to a destination for, say, six months,
the agency would get on that bandwagon, she said.
Cheryl Hudak, owner of the $4.5 million Travel Dimensions in
Boardman, Ohio, said she checks for consolidator options "all the
time" on international bookings and sells America West "if we can"
but has little access to route-specific commission offers.
Deborah Dillon, owner of Village Travel, a $6 million leisure
agency in Folsom, Calif., said her key issue was the continuing
battle over Web fares and not zero pay.
She said booking on the Web is an unsatisfactory alternative
because "there is no protection for the client or us if there are
changes."
'Brutal'
Gill Engles, who chairs the $14 million Church Travel in
Barrington, R.I., called the past year "brutal" and said, in jest,
he is planning his next business Û Gill's Grill Û and, in all
seriousness, that his newest project is his war budget.
He, like others, has seen relations with airlines worsen, partly
because there are fewer sales reps. He also worries that cruise
lines, for example, will turn to the Web because they have lost so
many "points of distribution" due to airline pay cuts.
It's not that nonair companies don't want his business. "The
reps come here and [tell us] how they need our business, and
they're saying they'll lose their jobs" if they don't get it,
Engles said.
Austin cited lost waivers and favors as an issue, as well as the
growing divide between preferred and nonpreferred carriers.
Hale said his relationships with airline DSMs are largely
unchanged, but no one in airline top management "was listening to
the DSM or the travel agent."
Like Austin, Dillon, at her much smaller leisure agency, also
feels the pinch on waivers. She said she sometimes advises clients
to make their own special requests, knowing they may have some
luck.
Robison said when an agency has a problem, the carriers "won't
bend for anything."
She cited, as an example, a mechanical problem with printers
that caused her to miss a ticketing deadline. In that case, she
said, if the client has lost a good fare, "we start over," and the
unbending airline may lose the business.
Anti-agent?
Robison also worries that airline attitudes about commissions
and agents in general may permeate other sectors as airline
staffers are laid off and take their anti-agent attitudes to other
travel companies.
Maureen Conlin, owner of the $9.5 million leisure agency, Los
Gatos (Calif.) Travel, said last year was worse than expected but
mostly due to poor sales, not zero pay. She said her relationships
with nonair firms have not been affected by airline antics but
expects "something down the line."
"Agencies will have to pick their vendors and "be loyal to them.
"Some [nonair] relationships will be tight, and some will go away,"
she said.
Cut is just a slice of life
COLUMBUS, Ohio -- The major U.S. carriers went to zero base pay
a year ago, and "a lot of people thought I would be opening a pizza
shop," said Bill Roebuck, president of Automated Commission
Technologies (ACT) here.
In going to zero, most carriers said they would negotiate with
agencies directly. "They weren't kidding," Roebuck said.
Those negotiations brought an influx of special commission
contracts that have boosted ACT's role in helping its 300-plus
agency customers get the commissions due them.
ACT provides quality-control services to ensure agencies claim
the correct commissions by double-checking base and incentive
commissions claimed at the point-of-sale; it has nothing to do with
overrides paid at the back end.
Roebuck said there are about 20% more deals among his clientele
now than there were a year ago.
He said the new deals are not necessarily based on agency size,
and there are agencies with contracts that never had them before.
When the airlines went to zero, some agents had override contracts
that expressed the base and incentive as a single number.
Those agents didn't go to zero right away, but Roebuck said
carriers have reworked those contracts by now. In about half the
cases the entire amount is called an incentive and the favored
agency still is getting everything it got before.
For the remainder, the base amount was deducted, but the
incentive figure generally survived. As to which agencies kept the
whole bag of money, Roebuck said it was not necessarily the biggest
agencies; it was "definitely case by case."
Many deals are for short terms and focused on specific city
pairs. Roebuck said agencies that get the contracts are those that
can show their historic production by city pair and those the
airlines believe have potential for a good showing.
In some highly targeted promotions, the rate can go into double
digits. One carrier went to 20% on certain Asian markets for a few
weeks, Roebuck said.
In some commission deals, airlines impose restrictions that can
limit the number of qualifying tickets: point of origin,
destination, flight number, fare-basis code, ticket-designator code
(identifying a specific program or net fare, agency or corporation)
and tour code (the field often used to accommodate the contract
code). -- N.G.