As if you didn't know it already, the average domestic commission
rate is in free fall, and it seems clear that it won't be long
before the commission structure as we have known it shatters on the
According to ARC figures for October, domestic base pay sank to
5.51%, down more than a full percentage point in a year's time and
the lowest average rate taken at the point of sale in more than two
In terms of dollars, agents pocketed domestic commissions
amounting to $219 million in the month, down a depressing 13%
despite the fact that retail sales of $6.29 billion on 141
airlines, three railroads and five other suppliers soared 8% over
the previous October.
Worse yet, November's numbers -- which, unlike the October
returns, will reflect the full impact of the latest round of pay
cuts -- are all but certain to fall even lower.
If it is true, as many maintain, that the airlines aim for
nothing less than the dissolution of the travel agency distribution
system, the precipitous descent of the domestic pay rate to the 5%
level or below could prove the breaking point at which no amount of
service fees, accounting tricks or overrides can keep black ink
from turning red.
If the question is "How low can you go?" the answer for firms
still stubbornly dependent on point-to-point sales might already
be: no lower.
In a recent editorial, we gave credit to three airline-owned
CRSs that had made moves designed to ease the contractual
obligations binding some travel agencies. To that list we want to
add Amadeus, which recently boosted segment credits for nonair
bookings and offered incentives for agents to move into electronic
It's not, after all, the end of caps and cuts, but every little