Q: American Airlines just sent our agency a notice with a link to its new standard agreement for travel agencies. The notice and agreement state that if we ticket on AA or US Airways after June 12, we are deemed to agree to all the new terms. Are there any surprises in the new agreement? If so, do any of the surprises help agencies, or are they all anti-agent?
A: The new "Addendum to the Governing Travel Agency Agreements," which can be found here, is, at 4,849 words, 81% longer than the addendum that it is replacing. It is half the length of the ARC Agent Reporting Agreement that it supplements for U.S. agencies.
I performed a word-by-word comparison of the old and new documents, and I found at least a dozen substantive differences. I wish I could tell you that at least one of them is favorable to agencies or at least fair, but I cannot.
Here is the first set of differences, and I will follow up with others in my next column. All of these terms are new, with no equivalents in the old version.
First, AA defines "fraudulent activity" (for which you can get a debit memo or lose your AA appointment or both) not only to include the usual prohibited practices, but also to include "intentionally withholding ... information regarding American products and services, such as information regarding availability and pricing." So, you can lose your appointment by giving customers a quote that doesn't include AA flights if AA flies the route.
Second, lest you think that AA is not really requiring that it always be accorded equal treatment regardless of fare or commission differences, AA goes on to specify that "Agent will not impose service fees, discounts, or other fees ... with respect to the display, offer, booking, ticketing or sale of American's products and services that are higher than those imposed for the display, offer, booking, ticketing or sale of any other carrier products and services." So, you can't charge more for AA flights, and if you waive fees on any carriers, you must not charge a fee for AA flights.
Third, if you charge a service or transaction fee for AA flights, such a fee "shall be listed separately, and the charge or fee for an American booking or other American product or service must be the equal to the lowest fee imposed by Agent on other air carriers." The first clause may prohibit compliance with the DOT rule that states that you must quote an airfare with all fees included, although the DOT lets you break it down afterward if you wish. The second clause prohibits you from offering a lower fee on any carrier.
Incidentally, although these price-fixing rules sound like violations of the antitrust laws, remember that principals have the legal right to dictate pricing terms to their sales agents. Just as AA used to prohibit rebating, it now prohibits you from charging more for AA flights.
Fourth, while the old agreement allowed AA to sue you in Texas while you could sue AA in your hometown, you now give up that right, as you "consent to the exclusive jurisdiction of the United States District Court for the Northern District of Texas," where the courts have unquestionably favored AA.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].