Agencies plan to raise fees, cut jobs

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NEW YORK -- A number of agency executives said they will have to raise transaction fees and, in some cases, cut jobs to keep their agencies alive following an assessment of the international commission caps imposed earlier this month.

"In our best-case scenario, maybe three months from now, we can make people pay the appropriate fee," said Peter Klebanow, president of Ultramar Travel Bureau Inc. in New York. Klebanow said about 40% of his $95 million agency's air volume is international. He estimated that the caps will cut his international commission revenue in half.

The agency charges a fee of between $15 and $25 per transaction, and he said the rates could triple to help make up the shortfall. Even then, he would lose revenue on 80% of his international tickets, he said. "There is just no pool of funds to make up for that shortfall," he said.

Klebanow said Ultramar, which has 140 employees, will have to cut some "nonkey" jobs, but he has not figured out when or how many.

Stevens Travel Management, a competing New York-based agency, said it will have to raise fees and cut some overhead costs.

Sabina Terrades, the agency's first vice president, marketing and communications, said the average service charge in New York was $15 to $20 a ticket, and Stevens Travel was charging below the average.

Terrades said customers have been reluctant to accept fees in the past, but they will have to learn to live with them in the future. "I think [customers] don't really value [travel agency] services now because they used to get them for free," Terrades said. "[But] what the airlines are doing right now is not in their favor."

Agency executives said the $100 cap on roundtrip international travel may prove the most damaging of the three big rounds of cuts, as premium class international tickets were seen as the last bastion of protection from the 1995 domestic caps and the 1997 international cuts.

In the Midwest, agents are a little more optimistic about using fees to make up the commission shortfall.

Gig Gwin, chairman of Gwin's Travel, a $35 million agency based in St. Louis, said the caps will cost his agency, which sells about 20% international, about $150,000.

He believes he can make up the shortfall by raising fees and moving business to foreign-flag carriers that don't match the caps. "It has to be passed on to the client," Gwin said. "It has to be passed on to the consumer, or you pass out."

A spokesman for Minneapolis-based Northwestern Travel Management said he believes it can make up the commission shortfall with higher service fees.

Pam Wright, president of Nashville, Tenn.-based Wright Travel, is reassessing a pledge she made earlier this year not to charge fees. She still believes she can renegotiate her override agreements, which she calls "extremely good." Wright said if she was forced to impose fees, she would wait until the beginning of 1999.

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