MORE: The DOT filings referenced in the article below
are available in their entirety on Crossroads.
WASHINGTON -- American, Delta and United separately argued that
they have the right to set restrictions on travel agent commission
levels, as they asked the Transportation Department to dismiss
charges by the U.S. Travel Agent Registry that they engaged in
unfair competition by imposing international commission caps.
United accused Ustar, a not-for-profit business cooperative of
agents attempting to create a computerized reservations system
independent of the airlines, of filing the complaint to promote its
Ustar had argued that the caps show the carriers intend to
"unfairly compete in the sale of international air transportation
by driving travel agency income down to such low levels that travel
agents in North America will no longer be able to sustain the cost
of operating a travel agency business." Ustar also told the DOT
that "consumers will suffer higher travel costs" as more agents
charge fees, and the caps give airline-owned SatoTravel an
advantage over other travel management firms.
American responded that Ustar has no basis for the
anti-competition charge because American changed its commission
structure to remain competitive with other carriers. American
denied the cut was an attempt to "disintermediate" agents from its
distribution chain. American also noted that it has an addendum to
the standard Airlines Reporting Corp. agreement for its appointed
agencies, in which it "reserves the right to modify its commission
schedule from time to time and at any time."
The carrier said Ustar's complaint "makes no allegation nor even
suggests that American's decision to modify its commission schedule
is in violation of American's agreements." American said Ustar's
request to "bar" the carriers from capping commissions is beyond
the DOT's purview, because the Airline Deregulation Act states the
department "has no jurisdiction to dictate the market
Similarly, Delta said it has the right to "specify the rates and
conditions under which its agents are authorized to sell Delta's
products." Delta went on to argue that Ustar's charge of unfair
competition was "nothing more than unsubstantiated assertions
without a scintilla of evidence."
Delta noted that in a different case, the DOT dismissed a travel
agency's complaint alleging unfair competition against American,
ruling that the airline's agents are "obligated to obey all [of the
carrier's] reasonable directions."
United accused Ustar of trying to get the DOT "to intervene in
the marketplace to protect the financial interest" of agents rather
than the traveling public. United said its cap was a response to an
"uncertain economy and a competitive marketplace," adding that
despite direct consumer sales, it "relies on travel agents to sell
the vast majority of its tickets."
United also accused Ustar of exaggerating its claims that the
caps will force many agents to shut down. The carrier said agents
made similar claims after commission cuts on domestic tickets but
"data released by the Airlines Reporting Corp. six months
after...[show] an increase in the number of travel agency locations
during that period."
As for SatoTravel, the Big Three each told the DOT that
SatoTravel is a not-for-profit corporation that withholds a
percentage of each ticket it sells to cover its costs, and returns
any excess amount to its airline owners. Therefore, as American
contended, SatoTravel "will never be at a competitive advantage for
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