Overbooked : Fare Wars Leave Travel Agents Feeling Besieged by Customer Demands and Declining Income

As travelers scrounged for the last of the half-price airline tickets Friday, tired and angry travel agents cheered the sale’s end.

Despite the surge in ticket buying, the fare promotion cut deeply into agent commissions and added to the costs of doing business. It was yet another blow to an industry already suffering from the downturn in the economy, airline company bankruptcies and past fare wars.

“Agencies are taking a beating with this,” said Cathy Lagattuta of Topaz Enterprises, a Portland, Ore., travel consulting firm. “Unless they are making up a lot of volume, they are just not making a lot of money at this point.”

The damage went far beyond travel agent commissions and profit. It also struck a blow to the carefully cultivated image of travel agents as providers of high-level, personal service.

“This last week struck at the very personal kinds of counseling and first-name relationships that agents have with their customers and made itdifficult, if not impossible, to maintain” those relationships, said Alan Fredericks, editor of Travel Weekly, a trade publication.

The fare war took an emotional toll on travel agents such as Pearl Chekofsky of Corniche Travel in West Hollywood. Faced with a barrage of incoming telephone calls and a computer reservations system that had once again gone on the blink, the 24-year travel industry veteran panicked and told her boss that she could not talk to one more customer.

“I had people yelling at me. I had people hanging up on me,” Chekofsky said. “It’s crazy. We are killing ourselves for nothing.”

Travel agents took most of their anger out on the airlines for dragging them into the middle of another costly fare war. Despite selling selling 80% of airline tickets, travel agents often feel ignored and bullied by the carriers.

In the face of widespread hostility, most major airlines eventually waived rules that would have required agents to refund some of the commission on tickets that were re-booked on lower fares.

“One day they coddle us. The next day they slap us on the head,” said Ron Letterman, president of the Carlson Travel Network retail division. “We are a professional community of agents that should be recognized and reckoned with.”

The nation’s 32,000 agencies looked to 1992 for signs of recovery after a disastrous 1991, when the recession and the Persian Gulf War forced corporate and vacation travelers to cancel or scale back travel.

But expectations for a significant turnaround this year have yet to materialize.

In April, American Airlines launched a new, simplified fare schedule that reduced by 38% the price of fares most often used by business travelers. The cut failed to stimulate business travel as planned, leaving corporate travel agents with fewer commissions.

A few weeks later, American halved vacation fares in response to a promotion by Northwest Airlines. While ticket buying surged, many travel agents said the roughly 10% commission earned on the half-off tickets often was too little to cover their business costs.

Jim M. Roberts, president of Uniglobe Regency Travel in Rancho Cucamonga, estimated that it costs him an average of $21 each time one of his six agents issues a ticket. That means he was breaking even under the most expensive round trips--about $200--available under the discount fares.

“It’s not worth it . . . just in the stress involved in doing this, in the overtime required, in working twice as hard to get half the pay,” Roberts said.

The vast majority of agencies generate less than $200,000 in commissions annually, which leaves little profit after paying salaries, rent and other expenses. It’s the small agencies dependent on leisure travel that are the most vulnerable after the deep cut on vacation fares and commissions, industry analysts say.

Even before the most recent fare war, smaller agencies were being squeezed out by “mega-agencies” that can operate at lower costs and generate enough ticket sales to qualify for more lucrative commissions from airlines.

“The good news is that (the fare war) did generate a tremendous amount of interest,” said Fredericks at Travel Weekly. “The bad news is that the smaller agencies simply could not cope.”

That harsh reality clashes with the jet-setting image of travel agents working in offices decorated with posters of Hawaiian beaches or European cathedrals. But the allure of the travel business remains strong and explains in part why last year 3,000 agencies opened, replacing an equal number that closed, according to the American Society of Travel Agents.

“A lot of people can get sucked into the business,” said Tom Blakeley, Travel Edge Solutions, a San Clemente-based travel consulting firm. “The perception is that it’s an easy business. The hard reality is that it’s very hard to make a living . . . in this business.”

One could certainly lose sight of that in the pleasant offices of Corniche Travel. Art prints hang on the walls and plants thrive in the sunlight that pours through the windows of the second-floor office on Sunset Boulevard.

But it does not take long to discover discontent.

Agency President Anastasia Kostoff Mann and her 16 full-time employees complain about arrogant airlines and the lack of respect from both carriers and some customers. Harsh business conditions mean travel agents have not seen a pay raise in two years, while Corniche has begun charging some customers for faxes and delivery to cover costs.

A half-fare war has only added to a long list of problems. “We are not making any money on it,” Kostoff Mann said. “What we are suffering now is being created by the industry we serve.”

Under the crush of calls and reservations, General Manager Johnna Hiatt worked until midnight most evenings while taking calls from clients at her home during the weekend. After dealing with anxious clients and overwhelmed airlines, the 30-year-old travel manager says she has little energy left to plan her own vacation get away.

“I would just like to go home.”

Too Many Agencies? New travel agencies continue to open in the face of increasing competition and the econmic slowdown. Some industry officials say there are already too many travel agencies in operation.

Year: Travel agency locations

1991: 32,000

1989: 30,400

1987: 29,600

1985: 27,000

1983: 22,600

1981: 19,000

Source: Travel Weekly