NEW YORK -- Lowestfare.com, Carl Icahn's on-line ticket
discounter, abruptly stopped dealing with travel agents as
distributors of its discounted TWA tickets, after TWA's bankruptcy
judge terminated Icahn's deal with TWA for the tickets.
The commissionable TWA tickets were not sold through the
Lowestfare.com Web site, which is directed to consumers.
Agents signed with Lowestfare could purchase TWA tickets through
CRSs, then queue the PNRs to Lowestfare to receive the discounted
price.
The company sent a letter to 3,000 travel agents under contract
as distributors that they will no longer be able to sell the
tickets.
"All ticketing and queuing PNRs must be ceased as of 12 noon EST
March 13, 2001," said the letter, signed by Lowestfare's vice
president of sales April Merenda.
The letter said Lowestfare is staggering its final monthly
commission payments to agents: 50% after 30 days, 25% after 60
days, then the remaining 25% after 90 days. Lowestfare.com would
not comment on the letter or its current plans.
The move forced speculation on Lowestfare's viability as an
on-line travel provider without the discounted TWA seats.
"It's absolutely critical that it lost this deal," said Heidi
Kim, an analyst at Jupiter Media Metrix.
She said the TWA ticket deal "actually made [Lowestfare]
sustainable. Now it is faced with the challenge of all on-line
travel providers of finding higher margin alternatives to airline
tickets. The next few months will prove whether this will make or
break it."
Lowestfare also owns Maupintour, the luxury escorted tour
operator, and Jetset Tours, an air consolidator. Both will continue
their historic payment terms to travel agents. Maupintour pays full
commissions. Jetset Tours works on a net fare basis.
Icahn's access to the discounted TWA inventory stems from his
1992 departure as chairman and principal shareholder of TWA. It
allowed him to purchase tickets from the carrier at a hefty
discount although Lowestfare was prohibited from using TWA's name
in its promotions.
The so-called Karabu contract was to be in force through
2003.
Trade laments loss of ticketing option
For agents who were selling Lowestfare tickets, it was a blow.
"Lowestfare came in very handy for us," said Edie Buckner, vice
president of sales and marketing of Gayety Travel of Brooklyn,
N.Y.
"It was a good way to help consumers go through agents instead
of through the Internet," she said. "It was also good commissions
-- 10% of whatever fare. It was uncapped, and it was a nice savings
for the clients," Buckner added.
"It's disappointing," said Dick Knodt, president and chief
operating officer of Vacation.com. "It gave our members a chance to make a
reasonable return for their work.
"Lowestfare had a pretty good system that many of our members
were able to work with. [Now] it's one less option for travel
agents," he said.
"It's terribly sad," said Sue Shapiro, president of Giants.
"Travel agents have lost a terrific opportunity to make money.
Customers got a lower fare; agents got a higher commission.
"Consolidation in the airline business once again proved not to
be the travel agents' friend -- nor the consumers'."