f the airline cuts the commission to
zero, are you still the airline's agent?
That was one of the first questions ASTA president Richard
Copland asked in the wake of Delta's move to zero, and the question
goes right to the heart of the matter: What does that big fat zero
do to the airline-agency relationship?
The answer appears to be everything and nothing.
Compensation might not define the relationship, but it clearly
reflects the value of the relationship -- for both parties. If the
airlines believe that most travel agents can and should be
compensated by the client rather than by the principal, what's the
point of having a principal-agency relationship? It is only one of
many kinds of producer-seller relationships, and it might not be
the one for you. In fact, it might not be the one for the 21st
For many travel retailers, the traditional airline-agency
relationship might be beginning to look and feel like a
straitjacket that locks the intermediary into a legacy information
system, an inflexible remitting regime and a one-way revenue
Just as cruise-only, home-based and other agents have found,
there are alternatives to the traditional one-size-fits-all
approach to selling travel.
Concepts like net fares and dealerships were hated and feared by
most agents 25 years ago but many of today's agents are openly
discussing these concepts, even embracing them. As Copland put it,
the zero commission scenario "has the potential of changing the
entire structure of the agent's business relationship with the
We suspect that for many of our readers, that no longer sounds
like such a bad thing.
• • •
For the record
he myth persists in the general
media that travel agent commissions are, as the Wall Street Journal
put it recently, "one of the largest costs to airlines."
In the case of Delta, which ushered in the zero era, commissions
are pretty far down the page of the carrier's 2001 profit-and-loss
Delta's commission payments came to $540 million last year, far
behind $6.1 billion in salaries, $2 billion for fuel and $1 billion
for various "contracted services." "Other" accounted for $816
The carrier spent $800 million for maintenance materials and
outside repairs, and $780 million on landing fees. Aircraft lease
payments accounted for another $737 million.
We're almost there. But ahead of commissions are "other selling
expenses" at $616 million.
Alert readers will notice that $540 million is the lowest number
in this list, so far.
We left only one thing out: Passenger service, $466 million.