WASHINGTON -- The House regulatory reform and oversight
subcommittee heard testimony from travel agents who criticized the
major airlines' zero commission policy, as they urged Congress to
pass legislation that would "level the playing field" by providing
agents with access to all air fares.
"The major airlines' elimination of the commission traditionally
paid to travel agents on the sale of domestic airline tickets is
anticonsumer and anticompetitive," said Louis Fenech, president of
Royal Holiday in Sayville, N.Y. "It threatens to deprive consumers
of access to their preferred source of travel information and
tickets."
Fenech, who is president of the Travel Agents of Suffolk County
(TASC) and an ASTA member, said the cuts, even with service fees,
essentially forced agents to sell airline tickets virtually without
compensation. "We cannot do this job for free," Fenech said.
Celeste Siemsen, owner of Empress Travel in Coram, N.Y., chided the
airlines for getting Congress to approve $5 billion in direct
relief and $10 billion in loans from the government following the
Sept. 11 terrorist attacks, and then cutting commissions several
months later.
"What happened is that the airlines took the $15 billion in
taxpayer dollars, mine included, and six months later they
steamrolled over small businesses like mine in a direct attempt to
put us out of business," she said.
Agents also were critical of Orbitz, the airline-owned Web site, claiming
that is was anticompetitive.
But Gary Doernhoefer, Orbitz's vice president and general
council, maintained that the Web site was a solution "to a
distribution system that is broken."
"Orbitz earned access to Web fares by offering the airlines much
lower distribution costs than any of its competitors," Doernhoefer
said, countering assertions that the site receives special
treatment from the airlines that provide it with so called Web
fares unavailable on other sites or through travel agencies.
He added that competitors could obtain access to similar fares
if they provided the airlines with the types of cost savings
offered by Orbitz.
Doernhoefer, who equated Orbitz to a
farmer's market where various suppliers pay a fee to sell their
wares, said his Web site was not competitive to travel agencies,
adding agents could log on and sell Orbitz's Web fares to their
clients.
But Jacquelyn Alton, owner of Carlson Wagonlit Travel/Ameda
Travel in Houston said using Orbitz to sell airline tickets would
place travel agents in a Catch-22 bind: While agents are free to
sell Orbitz' Web fares, selling them would undermine the
productivity quotas on their GDS contracts in the process.
Siemsen, president of ARTA's New York state chapter, also
criticized the airlines for cutting commissions to U.S. agents
while leaving the commission rates unchanged for their counterparts
in other countries.
"It is frustrating to the chair that we don't have the airlines
represented here," said Rep. Mike Pence (R-Ind.), chairman of the
subcommittee, noting that the airlines had been invited to testify,
yet none accepted. "The $15 billion package was sold as a way of
stabilizing the travel industry."
Rep. Felix Grucci (R-N.Y.), a member of the House Small Business
Committee, who was instrumental in holding the hearing, was
"outraged" that there were no airline representatives present at
the hearing. He threatened to possibly subpoena the airlines to
appear if a similar hearing was convened in the future.