ravel agents reacted with some dismay
and anger over a Consumer Reports article that suggested agents
often fail to provide complete information on low fares because of
airline overrides.
The report is available on the Consumer Reports
Web site and will appear in the June issue of Consumer Reports
Travel Letter. It is based on anonymous phone calls to 840 travel
agents.
Consumer Reports did not volunteer the exact language used by
its anonymous callers. The request is variously described in the
article as a request for "all of the lowest-fare nonstop options,"
or "all of the lowest-fare flights," or "all of the nonstop
airlines with the lowest fare" or "all airlines with the lowest
fare."
The report did not say whether callers specified a day or time
of travel. Consultants for the newsletter used Sabre and Apollo to
check the results in real time.
The
study said 51% of agencies immediately provided the information as
requested. That rose to 63% when callers asked agents to
double-check.
Another 25% did not provide "all" of the requested information.
The remaining 12% failed, in CRTL's estimation, to provide the
lowest fare at all.
Mike Spinelli, former chairman of the Action 6 consortium in
Lowell, Mass., which was recently acquired by Vacation.com, said,
"Maybe some of the results ... weren't so good because customers
aren't taken as seriously when they call in as anonymous shoppers.
Agents can't waste their time on shoppers today."
Norman Cotton, president of the Austin Associates consortium in
Framingham, Mass., said, "I'm completely [ticked] about this report
because I think it is totally wrong and sending a bad message...
CRTL chose a poor format for conducting this survey and didn't pick
a realistic scenario for how business is conducted."
Doris Davidoff of Belair Travel in Bowie, Md., also questioned
the methodology, saying many agents can't or won't "go to the wall"
for an anonymous caller seeking low fares. "My agents are trained,"
she said, to find out if such callers are really ready to buy. If
they are not ready to buy, Belair will attempt to "give them an
approximate idea of what's out there," because many such callers
are just "shopping around so they can go to Priceline" and make a
bid.
CRTL did not offer reasons why some agents did not meet its
expectations, but suggested that overrides played a role.
"We don't know whether this poor showing was due to the agents'
lack of training, lack of skills, insufficient technology, or bias.
But we do know that airlines pay 'override' bonus commissions," the
article said.
CRTL went back and surveyed the 840 agents to ask whether they
had override agreements, and only 20% said they did. Many agents
refused to answer the question.
CRTL said the DOT requires
agents to disclose information about overrides when asked, but
Travel Weekly has determined this to be erroneous (See sidebar below).
CRTL said it will ask the DOT to make it mandatory for agents to
disclose overrides and incentives.
Steve Loucks, a spokesman for Carlson Wagonlit Travel's
Associate Division in Minneapolis, said "I am disappointed and
mystified that somehow CRTL seems to view [overrides] as
anticonsumer. Since no other business is required by law to tell
consumers about their business relationships, it makes little sense
to single out travel agents."
American Express defended its preferred relationships, saying,
"In some cases, those relationships actually result in savings for
the customer."
ASTA criticized the CRTL report and reiterated its long-standing
assertion that consumers are not hurt by the override agreements
agencies have with suppliers.
If you want to play devil's advocate you can probably raise some
very good arguments on the negative side," ASTA president Richard
Copland conceded. "However, Department of Justice has investigated
the concept of override commissions for many years. It has never
once come out with any negative analysis.
There are no consumer cases around, at least to my knowledge,
that any consumer was ever hurt by the fact that override
commissions were given [to an agency]."
Copland argued that the commission cuts demonstrated agents are
unable to move market share, when agents were unable to book away
from carriers that cut commissions.
Copland said it is in the agent's interest to book the flights
consumers want or they will lose the customer.
"The majority of override agreements have nothing to do with
volume. That is a misconception," Copland said. "The airlines put
out override agreements to encourage city pairs. [Otherwise] the
public picks the airline."
Copland noted that agents sell 80% of airline tickets and they
couldn't do that "without giving value to the traveling public. I
challenge [CRTL] to show me incidents where the traveling public
has been hurt by overrides." To read the entire report, click here.
DOT says there is no disclosure requirement
The Consumer Reports story claims that a Department of
Transportation "guideline" requires travel agents to disclose
information about their airline override agreements if directly
asked by a consumer.
This is not the case.
Travel agents are not required to disclose anything about their
compensation from airlines. Agents can respond to such requests by
stating that, as a matter of policy, they do not discuss these
arrangements with clients. To clarify matters, Travel Weekly
obtained the following statement from the Transportation
Department's assistant general counsel for aviation enforcement and
proceedings, Samuel Podberesky:
"There is no specific law or regulation that requires travel
agents to disclose their override commission arrangements with
airlines. However, federal statutes bar airlines or their agents
from engaging in deceptive practices. If consumers ask a travel
agent whether the agent has override agreements with airlines, and
the agent gave consumers untruthful information, this might be
considered a deceptive practice under the law. Agents' refusing to
provide information on their commission override agreements would
not be considered a deceptive practice."
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