t's done. It's here. Zero commissions.
There may be some chance that, for competitive reasons, the plan
will be modified, but if history is any guide, Delta's move will
soon be matched by other major airlines.
Delta's public statement referred to a "new market reality" that
is "forcing both Delta and travel agents to adapt."
True enough, but we submit that agents, even though they expected
that this day eventually would come, have been doing most of the
adapting when it comes to changing patterns of distribution.
Not to diminish the economic pain that the airlines have endured
since Sept. 11, but Delta did not produce an operating loss of $1.6
billion last year because of the inefficiencies of travel agency
The airline's survival does not hinge on this decision.
Fortunately, the same can be said for those smart travel agents who
have succeeded in diversifying their businesses.
Delta noted that the elimination of base commission rates
"removes one of the last vestiges" of the regulated era when the
commission rate was fixed "without regard to efficiencies or sales
results ... In contrast, Delta's pay-for-performance program will
reward key travel agencies."
Agents, now more than ever, have to cast off some vestiges of
their own and aggressively cultivate preferred relationships on the
basis of what the suppliers can do for them, because it looks like
that will be the new reality.
e'd be the first to admit that
the U.S. airline industry has had its share of problems lately, but
we will also be the first to remind the government that any relief
for airlines has to be fashioned in a way that does no harm to the
rest of the travel industry.
Unfortunately, a group of charter airlines has laid a proposal
at the doorstep of the Transportation Department that would do
great harm to what has been, until now, a deregulated market for
If you're a tour operator, meeting planner, incentive house or
travel retailer, you can organize a charter flight from the U.S. to
a foreign destination using virtually any airline that will agree
to negotiate a price.
Since deregulation, the U.S. and many of its trading partners
have permitted each other's airlines to operate so-called "fifth
freedom" charters, meaning they don't go to the carrier's homeland.
This allows a tour operator to entertain a bid from, say, a
European airline for a charter between the U.S. and the Caribbean.
This open competition is one reason why charters have remained
But the National Air Carrier Association, which represents some
U.S. charter airlines, claims its members are losing too much
business to foreign carriers that fly charters from the U.S. to
The DOT only allows such charters if the carrier's home
government offers reciprocal opportunities to U.S. carriers, but
NACA says this isn't enough. It says some of these carriers are
from small countries whose outbound travel markets can't offer
"equivalent" opportunities for U.S. airlines.
In such cases, NACA says, the DOT should give U.S. carriers a
right of first refusal -- in effect, the right to step in when a
tour operator and a foreign airline have a contract, and to take
over that contract, "price notwithstanding."
That's the proposal, and we are hereby hooting it down. It was
born of the same protectionist instincts that prevailed in this
business before deregulation, when the charter industry's biggest
problem was the "solution" it now seeks: government interference in
• • •
teve Sedgwick and Sarah Hall
have something in common. They're both travel agents, and they are
fighting uphill battles in the federal court system over issues
relating to the airlines' commission cutting.
In a new and separate case, travel agent Neal Dembo is taking on
Pegasus over its hotel commission processing service.
Regardless of how these cases turn out, these agents deserve a
tip of the hat for taking on such industry Goliaths in the
courtroom, a battleground fraught with cost and uncertainty.