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
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
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
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
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