Hawaii agents endure headache

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HONOLULU -- Two major sources of volume business for Hawaii agents are interisland air tickets and Las Vegas leisure travel.

Both these sources have attracted controversy and government intervention in issues that could have had detrimental effects on the agent community, but did not.

One other thing they have in common: They bring agents little revenue compared with the work involved.

First, in April of last year, Hawaiian Airlines began competing with agents, selling interisland ticket coupons through Bank of Hawaii automated teller machines.

Second, in June 1998, Jimmy's Travel, a Honolulu operator of Las Vegas charters, closed its doors, owing consumers around $900,000 for prepaid packages.

Agents surveyed by Travel Weekly said they had not been affected by Hawaiian's ATM ticket sales. The big fear was that Hawaiian would undercut agents, but that did not occur.

Most agents buy Hawaiian interisland coupons from local consolidators, marking them up to make a 10% commission. They can sell coupons to clients at $3 or $4 below the price of $51 per interisland segment that Hawaiian charges through ATMs.

Regal Travel, the state's largest agency, fought the matter through hearings before the state Department of Commerce and Consumer Affairs (DCCA). Regal charged that Bank of Hawaii was acting illegally by not registering as a travel agency under state law.

Last June, DCCA's director gave a final ruling: Hawaiian was renting ATM space and so the bank was not an agency under the state's travel agent definition. Jimmy's Travel sold direct to consumers, so its closure -which resulted in one of Hawaii's largest consumer protection investigations -- did not affect agents.

The legislature moved earlier this year on bills with measures aimed at increased consumer protection.

However, Hawaii's ASTA chapter did not testify at legislative hearings and had no official position on the issue.

The result was Act 258, which became effective Oct. 1 and adds a new charter operator section to the state's travel agency law.

Previously, charter operators had only to register as a travel agent under the agency law, which requires that clients' money be put into a trust account (although Jimmy's did not).

The new law also requires they register as a charter operator and adhere to the new provisions, which include posting a bond or letter of credit. The amount depends on the number of charters planned, and can run up to $1 million for 15 or more charters per year.

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