Q: Can my agency charge service fees that discriminate against
my nonpreferred suppliers? Can I go so far as to waive fees for
sales on preferred suppliers and charge fees for all others? Also,
is it legal to quote an air fare on the telephone that includes our
service fee without breaking down the price?
A: It is perfectly legal to charge different fees for different
suppliers and to waive fees for sales of preferred suppliers. My
advice applies not only for airlines but for all modes of
travel.
This kind of discrimination does not pose any problems under any
federal law, and no state may regulate the sale of air travel or
anything that affects the price of air travel. Thus, you can
certainly use service fees to channel sales to preferred
suppliers.
For example, if both Carrier A and Carrier U have the same fare
in a city pair, you can charge a service fee of $20 for Carrier U
only. If you impose the fee without exception for all clients, as
industry expert Bob Joselyn recommends, you will move sales to
Carrier A. If you then get a high override from Carrier A, you will
be killing two birds with one stone.
Of course, if Carrier U becomes angry, it can lift your plate,
as Southwest did a few years ago with a few agents who imposed
service fees for Southwest only. Since you have no legal right to
keep your plate, you need to discriminate with prudence and to
cease the practice if Carrier U threatens you.
Second, although there is no law that expressly prohibits
bundling an air fare and a service fee in one price quote (for
example, saying, "Our price for Carrier A is $300, and our price
for Carrier U is $320"), you could be running afoul of the
provision of the Federal Aviation Act prohibiting deceptive sales
practices in general.
However, the Department of Transportation will not punish anyone
for a given practice until it holds that the practice violates that
provision. Therefore, until the DOT expressly holds that such
bundling violates the deceptive practices prohibition, you should
not hesitate to bundle.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law.