Flying Out of Bankruptcy

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ational Airlines is flying its way out of Chapter 11 bankruptcy. The Las Vegas-based carrier has secured a $112 million financing package and hopes to end its bankruptcy next month.

The airline failed to convince the federal government that it deserved a loan guarantee. Last month, the Air Transportation Stabilization Board turned down a request for a $55.5 million guarantee. That left private financing as the only escape hatch for the airline.

National has continued to support travel agencies, bucking the zero-commission trend by paying an upcapped 10% to the trade. But the pay policy is in jeopardy.

Some months ago at an ASTA meeting in Las Vegas, Michael Conway, National's president and chief executive, warned that if agencies didn't start driving more business to the airline, the commission practice might change.

Conway was particularly exercised about the fact that many agencies apply the same customer service charges to National tickets as for other carriers' tickets even though the agencies also earn commissions from National.

He urged agencies to give National a price advantage by waiving or reducing service charges on the carrier's tickets.

Conway's appeal drew mixed response. Some agencies agreed that they should waive service charges in order to provide the commission-paying carrier with a price advantage.

But others argued that their service-charge policies should be uniform and shouldn't vary according to a carrier's commission policy.

In announcing its new financing last week, a National spokesman renewed the call for greater support by agencies.

"We need to see some market shift, " the spokesman said. "We have to make sure it's economically feasible for us to continue to do this (pay the commissions) ... this really is the time now for travel agencies to step up."

It would be a shame if one of the few airlines that has remained steadfast in its support of agencies is forced to back off its commission policy. But that is likely to happen if National doesn't see a significant improvement in agency bookings in the very near future.

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