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Agents Talk Back
ChrisCrossings · November 18, 1999

Q: We are a small travel agency in Lakeville, Conn. We don't charge fees for our services. Yesterday, United Airlines announced that it will cut travel agency commissions to five percent. At a time when the airlines are making more money than ever, they are trying to put travel agencies out of business. Not everyone has access to the Internet, and it is unfair (and possibly illegal) to deny access to the lowest fares in this manner. Plus, many of our customers do not have time to "surf" for the best fares, and frankly, there's alot of hooey on the Internet. To date I have never found a better fare on the Internet for anything other than last-minute travel. We are a service industry providing personal, customized care to our clients, and the airlines (who courted us for years) are now doing whatever possible to destroy us. There is still some value in allowing skilled, educated and experienced consultant plan your travel. There is still some value in dealing with a human being. I hope we survive.

--Jennifer Zwicky

A: I hope you survive, too, Jennifer. Although I would beg to differ with some of the points you make -- notably that comment about all the hooey on the Internet -- I agree that airlines have made a serious mistake.

But their error isn't cutting commissions. (FYI, most other carriers followed United's lead and chopped commissions a day after Jennifer's letter was received.) As the airlines fall on difficult times -- just take a look at the carrier's recent earnings and traffic reports -- I think their head honchos should give a thought to the wisdom behind creating and then destroying the travel agency distribution system.

Agents aren't to blame for the downturn in airline results. The airline industry is predictably cyclical. Every few years it heads south because of a variety of factors that no one reading this column is particularly interested in.

But in building a commission-based distribution system and then systematically dismantling it, the carriers have set a bad precedent. The message is that it's OK to create an entire industry if it's the expedient thing to do and then zap it when it isn't.

As a minor aside, here's where I disagree with you. I think the Internet is a viable distribution channel for airline tickets. Coupled with phone reservations centers and a limited number of third-party distributors that negotiate special fares, it can be the future of travel.

Put differently, the airlines are correct in rewriting their distribution equations. It simply makes economic sense to do so.

But they've gone about it all wrong -- without any apparent regard for the consequences of their decision. I don't know how they could let travel agents down easy. Perhaps by hiring some of them, since travel agents had been de facto airline employees ever since the advent of commercial air travel. Or maybe by subsidizing their retraining. Or how about by paying them reparations for the mayhem visited on their lives?

My point is, in leaving agents high and dry, what does this say about how the airlines do business? If it's OK to screw agents by eroding their commissions, then how about passengers?

There's already plenty of evidence that airlines do believe it's perfectly acceptable to mistreat and abuse customers in the name of profits. The latest news that many carriers have raised advance-purchase fares by $20 across the board suggests that there's no limit to the corporate greed. At the same time, airlines continue to cut leg room, meal service and a host of other amenities.

In a perfect world, airlines would find a way of generating revenues without making passengers suffer. In a perfect world, airlines would find a way of shifting their distribution away from agents without adding to the unemployment rolls. In a perfect world, the airlines would have a conscience. Their managers would be compassionate.

We do not live in a perfect world.

Christopher Elliott's column appears on Thursdays. All e-mailed questions to ChrisCrossings become property of Ticked.com and may be edited, condensed or republished at the site's discretion. You may reach Elliott at christopher@elliott.org. Or visit his home page at http://www.elliott.org.