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Watch Your Wallet
Cheap Charlie · April 2, 2002

With much fanfare and front-page newspaper articles, the news spread of the end of commissions for travel agents.

That is what the big airlines want passengers to believe.

Reality tells a far different story - a story of coming intrigue and what amounts to kickbacks by major airlines to be offered to thousands of mom-and-pop retail travel agents.

In a nutshell, airlines have cut only "base" commissions. The airlines expect passengers to pay for travel agent "services" while they pay nothing. But, the airlines openly admit that they will grease the palms of agencies that throw extra business their way - a secret, pernicious, underhanded, and biased payoff, about which, passengers will never learn, if the airlines have their way.

We, as passengers, now face the worst of both worlds. We have to pay for "advice" from the travel agent while the airlines will be actively working to influence that "advice." This new arrangement makes it more difficult than ever to get honest information from travel agents.

We have now reached a very important junction in the airline-agent-passenger matrix. For years, it was clear that travel agents were agents of the airlines. They handled the airline ticket stock. Travel agents were paid by the airlines through commissions. (This is still the case, for the most part, with hotel and rental car reservations.)

The system worked for the traveling public since all airlines basically paid the same commissions - there was no reason in most cases for the agent to push one airline over another above price and convenience for the passenger.

Today, for whom is the travel agent an agent? Passengers or the airlines?

Once passengers begin paying fees, agencies should work for the passenger. Once an agency accepts a fee, that agency will have, at the minimum, an "implied contract" with the passenger.

I suggest that you get it in writing.

Agencies will have to promise, by contract, that they will search for the least expensive ticket. Or, they will have to promise their clients, the passengers, that they have selected certain flights based on "best possible times to travel." Or, agencies will have to state that all suggestions will be in the best interest of the passenger.

Or, on the other hand, agencies will have to come clean and tell passengers that they may suggest an airline or tour operator based on secret commissions and payoffs that they may or not receive based on reaching certain sales targets. In other words, the airline that pays the biggest "incentive fee" will get the business.

This is ugly and miserable for consumers. In the past, when travel agents were agents of the airlines across the board, the effect on consumers was relatively benign. There were some "overrides" here and there, but base commissions were the main source of agency income.

We are now faced with a sales structure where agencies will be encouraged to operate as wolves in sheep's clothing.

The agencies will now have divided loyalties between passengers who ill be paying their "fees" and the major airlines which will be slipping them a bit of corporate boodle if they push business their way.

What can passengers do to protect themselves?

Make sure to get a clear written contract explaining exactly what a travel agent will be doing for their "fee." This agency/passenger contract should be written and clearly understood by both parties. The agency, for its own protection, will need, in writing, exactly what services the passenger is expecting.

It will not be easy. Travel is a complex buying process that involves an incredible mix of options and trade-offs. Travelers and their "agents" have to deal with favorite airlines, best schedules, best prices, best connections, airport parking, airport transfers, hotel needs, distances between lodging and attractions, and much more.

With online agencies and online airline sites, where the passenger knows that they are responsible for due diligence with regards to planning travel, the death of commissions is moot - travelers are already doing the work once performed by an agent.

For travelers who depend on agencies for travel research, bookings and purchase of airline tickets (about 70 percent still book and purchase through agencies) this new system of "passenger fees" combined with airline payola can only spell trouble.

Charlie Leocha is the Boston-based author of Travel Rights: Know the Rules of the Road and the Air Before You Go. Cheap Charlie appears every Monday on this site. E-mail him at leocha@aol.com or access his Web site.