Mark Pestronk: Legal Briefs

Agency could still collect despite group's attempt to bypass March 15, 2010 Q: A group of 500 conventioneers contacted us to obtain a block of hotel rooms in a major convention city. We obtained detailed, commissionable group quotes from three properties, and the group picked one of them. We proceeded with travel arrangements, but the group suddenly stopped doing business with us and might be working with the chosen hotel directly. Are we still entitled to our commissions? What if the rate quotes we obtained were noncommissionable and we planned to make money by marking up the hotel? Sabre contract wording may deprive you of booking incentives March 8, 2010 Q: In my agency's Sabre contract, which I assume contains the same basic boilerplate as every other Sabre contract, there is a key distinction between two kinds of airline bookings. We get no incentives for bookings on carriers that participate in Sabre at the "Basic Booking Request" level, but Sabre pays incentives for bookings on all airlines that participate at the "Full Availability" level. Since I cannot find any definition of the latter term, I sense a loophole: Can Sabre deprive us of incentives by devising new levels of participation and thereby deprive us of all segment incentives for carriers participating at those levels? Determining EBITDA provides a basic sense of agency's value March 1, 2010 Q: In the latest email newsletter sent by Innovative Travel Acquisitions, company owner Bob Sweeney wrote: "Travel companies that specialize in corporate, government, educational or religious travel are doing well and are still able to receive up to 5x EBITDA due to supply and demand." What is EBITDA, and what does "5x" refer to? Does this refer to all agencies that specialize in these kinds of travel? What about agencies that don't? Contracts are crucial for clients using online booking systems February 22, 2010 Q: Our agency offers one of the online booking systems for corporate accounts [examples include GetThere, ResX, Cliqbook and Rearden Personal Assistant]. We now have quite a few corporate clients using the system. The vendor recently asked whether we have contracts with each of these accounts, which I found to be an odd question. In many if not most cases, if we told a prospective corporate client that it must sign a contract before its employees could use the system, the account would refuse, and we would lose the business. Are we required to have a written contract with each corporation that uses the system? If so, what could the vendor do if we don't get them? Surprisingly, ARC playing nice in dropping branch office rules February 16, 2010 Q: You have often written columns that criticize the way ARC treats travel agencies. However, last year at this time, ARC dropped its proposal for same-day voiding. Has ARC taken any other actions that you would characterize as pro-agent? State laws vary on listing 'seller of travel' registration number February 8, 2010 Q: The websites of the major online travel agencies list the agencies' "seller of travel" registration numbers, either on the home page or in the website user's terms and conditions (T&C). Is there a legal requirement that all agencies must post their registration or license numbers? If so, can they list the numbers either on the home page or in the T&C, at their option? What about our agency, which has a website but sells nothing online? Terms of Travelport contract don't rule out forced migration February 1, 2010 Q: Travelport has just presented my agency with a new contract for Worldspan, and I am noticing several interesting changes in the Standard Terms and Conditions. In my present, soon-to-expire contract, a clause states that Travelport has the right to "migrate" my agency to a different GDS operated by Travelport, which presumably means Galileo. However, in the new contract, there is no such clause. Does this mean that, if I sign a new, three- or five-year contract with Travelport, I can count on not having to migrate to Galileo or some combined system for the entire new term? Corporate travelers using 'free ride' tactics to stiff agents January 25, 2010 Q: As a follow-up to your Jan. 4 column, our agency faces a related but worse problem: Corporate travelers or their secretaries often call us to do all the research on a complex itinerary, and when we are finished, they book with online travel agencies to avoid paying our transaction fee. So not only does the corporation violate the exclusivity clause, but our agents are also tied up in work that does not produce revenue. Assuming that this "free riding" does not violate our present contract, what can we do to stop this practice? DOT grounded proposal for airlines' customer service plans January 19, 2010 Q: In your Dec. 15, 2008, column, you noted that the Department of Transportation had taken the bold step of proposing a regulation that would require airlines to incorporate their so-called customer service plans into the contracts of carriage. The rule would "enable passengers to sue for breach of contract in the event that a carrier failed to adhere to its plan." Did the DOT eventually adopt that proposed rule, or are the customer service plans still just airy goals that no one can enforce? Agent, client can differ on definition of 'lowest available fare' January 11, 2010 Q: In your last column, you wrote that if our agency's contract with a corporation has a clause requiring the company to book with our agency exclusively, then "it is also no excuse for the manager to claim that employees can find lower rates and fares elsewhere, unless your contract requires you always to offer the lowest rate or fare found anywhere." What if our corporate contract does indeed require us to "offer the lowest available airfare"? Does such a clause require our agents to search the Internet every time a traveler calls us? Do we have to continue searching even after the reservation is made? What if we make a reservation at the best fare we find in the GDS or the Internet, and shortly afterward the traveler finds a lower fare on the Internet? Is it a breach of contract if we did not offer that fare? Client violating exclusivity pact when its employees book trips January 4, 2010 Q: Our agency has a written contract with a large corporate account. Under the contract, we are designated as the "exclusive" travel agency or travel-management company for all of the corporation's business travelers. However, we have recently found that many of those travelers are booking directly on supplier websites, and others are using publicly available online travel agencies. When we complained that such activity appears to be a breach of contract, the corporate travel manager told us that there was nothing we could do, because the corporation cannot control how travelers book and because the travelers had found lower rates on the Internet. Are these valid excuses? If not, is there anything we can realistically do to enforce our legal rights? When ejected passengers sue, courts rule in airlines' favor December 21, 2009 Q: One of my agency's clients was recently thrown off a flight for being rude to a flight attendant. When he was told to turn off his cellphone after the aircraft's door closed, he allegedly shouted, "Shut up and mind your own business. Can't you hear that this call is an emergency?" Another client, a Muslim in a keffiyeh headdress, was ejected for "acting suspiciously." Can either of these men successfully sue the airline for humiliation, discrimination or anything else? Neither of them was actually arrested. Does that make any difference? File change-of-ownership papers quickly to avoid ARC's wrath December 14, 2009 Q: Some years ago, following the death of my parents, I became the owner of our ARC-appointed travel agency. I never completed the change-of-ownership application, so as far as ARC is concerned, my parents are still the owners of my agency. At this point, I am afraid that ARC will penalize me if I disclose how long I have owned the business without telling them. What should I do? Will ARC terminate the agency or otherwise penalize us? Will I be blacklisted? GDS vendor will likely waive shortfall if new contract signed December 7, 2009 Q: In your May 4 column, "Defying expectations, GDS incentives are better than ever," you explained the ways in which GDS offers have improved despite all experts' predictions. Three years ago, my agency signed an apparently lucrative, five-year contract, but we now find ourselves in a shortfall situation. Our vendor has presented us with a bill for $20,000, which we cannot afford. Do you think that we can get out of having to pay this bill if we sign a new contract? If so, will the new contract's incentives be worse than they would have been if we had no shortfall? Is it prudent to commit to a new contract, given the uncertainties in the industry today? Judge might not see value in files taken by former employee November 30, 2009 Q: One of our agency's key managers just quit and went to work for our biggest competitor. We have learned that he stole numerous computer files, such as our client list by volume and our standard PowerPoint sales presentation. Do you think that we could be successful in getting a judge to grant an injunction requiring him and his new employer to refrain from using the information in the files? By the way, we have no written employment agreement with him. Keep control of ARC appointment until reassignment is OK'd November 23, 2009 Q: We have very little use for our ARC appointment, as we issue few airline tickets these days. Someone told me that, rather than simply terminating our ARC appointment, we could sell it to someone who needed an ARC appointment. Is that legal? If so, how much should I ask? Take 'reasonable care' to avoid liability for fraudulent tickets November 16, 2009 Q: Somehow, someone outside my agency accessed our GDS and caused e-tickets to be issued on two Sundays when nobody at the agency was working. The tickets were cash (i.e., non-credit-card) sales for travel on an African airline between points in Europe and points in West Africa on the day after they were issued. In the first case, we did not become aware of the fraud until after our ARC report was filed, and ARC drafted the cash from our account. In the second case, we were on the lookout, so we discovered the fraud in time for us to void the sales on the following day. Now the airline has sent us debit memos for the voided tickets. Is our agency liable for these tickets? Earnout should clearly define what constitutes 'commissions' November 9, 2009 Q: A competitor has made an oral offer to buy my agency for 20% of what he calls "commissions" for two years after closing. What would "commissions" typically include? Service fees? Group markups? Point-of-sale overrides? Overrides paid by check? GDS incentives? Also, would the percentage typically apply to future sales only to clients on our client list as of closing, or would the percentage apply to everyone who uses our agency in the two years after closing? Take steps to prevent liability for tour operator's negligence November 2, 2009 Q: Your Oct. 12 column, "Tour ops' 10 commandments (plus three) of risk management," covered how an agency can manage risk when it operates its own tours. What if my agency is simply selling a well-known operator's tours? Should we be taking any risk-management precautions, too? For example, if we sell a package tour to Israel, Jordan and Egypt, could my agency be liable if our clients were hurt or killed in a terrorist incident? Ex-independent contractor's online comments could be libel October 26, 2009 Q: A disgruntled former independent contractor has been using social media to make false accusations against our agency. He has published Facebook comments, website forum posts, blog entries and Twitter tweets falsely claiming that we stole money from him, that we operate a pyramid scheme and that we place unqualified agents on our Iatan list. When we contacted him, he claimed that the First Amendment protected his activities as free speech. Is that true, and if not, what can we do about these postings? Agencies run little risk using their credit cards for client sales October 19, 2009 Q: I know that ARC rules prohibit an agency from charging a client's ticket to a credit card belonging to the agency owner or the agency itself. Is this rule actually enforced, or can I get away with putting sales on my card when the client pays us by check? This practice would allow me to use the client's money to pay more pressing bills, like salaries. Tour ops' 10 commandments (plus three) of risk management October 12, 2009 Q: Our agency operates a small number of tours each year, and I always worry that something might go wrong that would cause participants to sue us. Aside from using disclaimers, what other steps can we take to lessen the likelihood that we will be sued for personal injuries, nonperformance by our suppliers or loss of enjoyment? Consider four factors before proceeding with sale of agency October 5, 2009 Q: I think that our agency is going to receive a buyout offer from a larger agency. If we like the price and terms, what are the next steps toward finishing the sale? Should I take the initiative in beginning those steps, or should I leave it up to the buyer? NYC hotel tax doesn't apply if fees are your sole compensation September 28, 2009 Q: In your Aug. 31 column on the new New York City lodging tax, you stated that "according to a literal reading of the law, your agency will owe sales tax on your service fees." Therefore, since my agency charges a service or transaction fee for a hotel booking, are you advising us to register and pay the tax for our hotel bookings in New York? No rule against sharing commission when booking for charity September 21, 2009 Q: A large charitable organization has approached my agency to arrange group tours for its members. The organization would like a commission of some kind; is it legal to share my commission or profit with a charity? If so, how should the agreement be structured? What role should the charity have in marketing the trips, handling sign-ups, taking payments and escorting the trips? Must all this be in a written contract, or can I rely on a handshake with the executive director of the organization?

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