n the wake of zero airline
commissions, travel agents who never before considered it are
looking at having tickets issued abroad in order to share in the
commissions that U.S. airlines continue to pay outside the U.S. and
Until now, the idea seemed rather outre, but even ASTA and ARTA
are reviewing the concept as one possible way to help members
The idea of shopping around for commission deals is not new.
California travel attorney Al Anolik noted it has been common
practice for years among consolidators and ethnic travel agencies
to ticket in foreign locations where they take advantage of higher
pay. Their strategy is to "shop around" for the highest commission
or override, he said.
And according to travel attorney Mark Pestronk, there are plenty
of places to shop.
He said agents in the Bahamas, Argentina, Brazil and "maybe
Chile" are interested in ticketing for American agents. He said the
situation is so competitive that South American agencies are
getting 15% for their domestic U.S. tickets.
Airlines are "giving away the store" there, he said.
Large travel agency organizations with central reservations
operations are particularly well-situated for using their
interconnected res systems for moving PNRs around to maximize
income, whether by obtaining tickets elsewhere in the U.S. (in
"miniconsolidator" deals) or across national boundaries.
And U.S. agents aren't the only ones shopping around. One source
said U.K. agencies have used American agencies for ticketing
services in order to collect from British Airways.
As reported in the April 15 Travel Weekly, Mark Koffman, owner
of Jetset Toorak near Melbourne, Australia, has been ticketing for
about a dozen North American agencies, even before the airlines
went to zero. Koffman allows the booking agencies to collect most
of the commission, minus about two to three percentage points.
While trade groups are looking at offshore ticketing, individual
agents are pursuing the prospect as well, judging by comments
appearing on the Forum at Travel Weekly's Web site. Two of them were
willing to discuss their situations.
Nancy McKenzie Ross, owner of McKenzie Travel in Vancouver,
Wash., said she is pursuing a "promising" relationship with a
Mexican agency that, like hers, uses Sabre.
She said that, while she would queue PNRs to the partner agency
for ticketing, she would get her segment credits from the
A few issues make the plan not as smooth as she would like: The
agency can accept only American Express but not the bank cards for
credit sales, and not all bookings can be handled with
Ross is not ready to move just yet, though.
She said she is seeking further expert advice.
Maryann Carey, an agent at Travel Time in Boca Raton, Fla., has
an assignment to look at the pros and cons of an offshore
relationship for her firm.
She said her agency's owner also owns three hotels in the
Bahamas, and she envisions using an outlet in the Bahamas because
of that connection and because the Bahamian currency exchanges with
the U.S. dollar at one for one.
She also envisions a res system link that involves emulation,
meaning the capability of making a CRT (in Florida, for example)
appear to be making its bookings somewhere else (such as the
Bahamas). In that case, PNRs would not have to be queued to another
However, based on vendor sources, it is not certain that
emulation across national boundaries would be possible in all
However, McKenzie Travel and Travel Time, like any agency, could
link their system to the res system of an unrelated agency --
provided they use the same vendor -- so that each agency could
access and change the bookings of the other agency.
There is usually a small charge for this; Ross said the Sabre
fee would be $25 a month. In some cases, the agencies would have to
contact their vendor to make arrangements to "bridge" in this way
but one or two vendors allow agencies to control this from their
With this setup, too, agencies can issue agent, auditor and
passenger coupons in different locations. Every document will
reflect the ARC or IATA number of the issuing location, which in
turn determines the commission.
Vendor sources said they "don't police" interagency bridging.
There are many reasons for bridging and "we have no obligation to
report to the airlines," one said.
The vendors also are able to track every keystroke, but there is
not much reason to do so. The airlines can only see the PNR
segments that are relevant to their services but not the history of
a booking file, such as whether it was queued to another agency for
In response to a question, one vendor added that if carriers ask
to see more data, "we don't take lightly our privacy requirements.
We often require that this be part of a legal investigation."
Travel attorney Jeff Miller -- who strongly advises against
cross-border ticketing -- said airlines would need a court order to
get the data, but in his experience, he said, airlines are more
likely to make ticket buys to get evidence of their own.
Been there, done that
For some agents, these ticketing games are old hat.
Rob Mellen, now an agent for a California AAA, said he once
worked at home as a commissioned agent for a Sacramento agency that
tried offshore ticketing beginning soon after the 1995 caps.
The agency first made arrangements in Mexico and later in
Panama, and Mellen said, all these transactions were electronic
tickets. The agency has since closed -- although not because of
offshore ticketing, he added.
And some agents say it's not worth the bother. Beatrice
Gutierrez is a Mexican native who owns Bea's Travel in Chula Vista,
Calif., just a few miles north of the Mexican border.
To her, the notion of ticketing across the border in Mexico,
where the commission is 5%, is "ridiculous ... Why would you want
to go across the border for that? The best thing is to not depend
on airline tickets any more and provide service and charge for it,"
Others see it as unethical. Hal Rosenbluth, chairman and chief
executive of Philadelphia-based Rosenbluth International, said his
agency has the capability to "issue tickets out of a different
country every day. I could siphon off certain parts of the
business, on certain airlines, and not hurt the agency, but I
question the ethics."
Laura Del Rosso contributed to this report.
Some caveats in the offshore mix
By Nadine Godwin
hile a number of agencies and
trade groups are enthusiastic about offshore airline ticketing --
or at least believe it's worth a look -- several agents, attorneys
and other observers offer a number of reasons to proceed with
caution, if at all.
The practice is an attempt to circumvent airline compensation
policies for U.S. and Canadian travel agents, and for that reason,
some say it's unethical.
Ticketing overseas is not illegal. However, it poses legal and
practical pitfalls, leading one source to note that transborder
deals and joint ventures are "not for the faint of heart." Here's
• If the practice becomes widespread, the airlines are likely to
put a stop to it. That would mean any investment in an overseas
arrangement would be lost.
• Airlines could also retaliate by canceling incentive
agreements with the participating U.S. agencies. One California
agent who tried offshore ticketing said the agency had gone public
about it and, as a result, it could not get airline overrides or
Also, in some foreign countries, sources said, agencies have
been threatened with loss of commissions by U.S. carriers if they
ticket for agencies outside their homelands.
• Depending on the foreign country involved, agents might face a
number of hazards. Sources cited theft, poorly trained staff and
lack of control over the quality of work.
• Refunds and changes can be especially troublesome, according
to the California agent who gave it a try. She said refunds took a
long time because "you are counting on a third party to process
[them]. It became very difficult to control."
• It might be necessary to provide a bond to protect an overseas
partner agency. Mark Koffman, whose Australian Jetset Toorak
tickets for about a dozen North American agencies, is considering
such a move in the wake of losses suffered when one of those
agencies failed after Sept. 11.
• Travel attorney Jeff Miller warned that agencies could face
new liabilities; if a client is unhappy with services provided by
the offshore agency, responsibility will fall on the U.S.
If that leads to a claim on errors and omissions insurance,
Miller said the insurance carrier might not pay.
"It's a total gray area," and if the insurance company says it
is fraud, "you would have to prove it is not," Miller said.
• Agencies have to be careful about which business is queued for
ticketing offshore. Some frequent flyer programs, for example, do
not award miles if the ticket is purchased outside the U.S.
Also, the agency wouldn't want to queue over, for ticketing and
reporting elsewhere, PNRs involving airlines with which it or the
client has an incentive deal. (On the other hand, sending out the
PNRs involving nonpaying airlines would make market-share
productivity look better for the paying carriers.)
• IATA applies different fare calculation principles under four
1. SITI (sold inside, ticketed inside the country where travel
2. SITO (sold inside, ticketed outside ... ).
3. SOTI (sold outside, ticketed inside ... ).
4. SOTO (sold outside, ticketed outside ... ).
All res systems are programmed to adjust fares accordingly and
to bounce fare codes that don't cross borders. Because of those
adjustments, when a PNR is kicked overseas, the fare might
If the ticketing agent does not properly identify where a
transaction is taking place, one or the other of the agencies could
be subject to debit memos, one vendor warned.