Since Feb. 9, when airlines started slashing their commission payments to travel agents across the country, those agents have been scrambling for strategies to make up the lost income. That leaves two key questions for consumers:
Will my travel agency start charging me service fees? And whether my agency adds fees or not, am I better off booking directly with airlines?
There aren't many answers available in the industry's currently muddied waters, but here are a pair of likelihoods.
One: If you're an infrequent traveler on modest itineraries who doesn't have an ongoing relationship with a travel agent, then yes, many industry veterans say, it's likely that many or most travel agents will start charging you some kind of service fees. In one influential trial program, rates were set to range from $5-$25 per transaction, but faithful customers were exempted.
Two: Even if your travel agency starts charging fees for some services, your agent's expertise may well be worth the expense. A shrewdly booked transcontinental ticket, after all, can save you $200 in one stroke. If you have an agent who finds bargain fares and already knows your frequent-flier program numbers, you're probably better off staying put through the next several months of industry sorting-out, and possibly for the long term too.
Right now, no one's certain how much the typical agency fee will be, or how much the figures will vary from one agency to the next--an extraordinary uncertainty, since four of every five airline tickets in the United States are booked through travel agents. Most veterans expect to reward loyal customers and apply fees only to walk-in customers whose bookings yield paltry commissions.
"I think what you're going to see a lot of is trial balloons and testing of the market, and it's going to remain unsettled for months," said Ed Perkins, editor of the Consumer Reports Travel Letter.
Susan Tanzman Kaplan, an attorney who owns two Los Angeles area travel agencies and serves as vice president and treasurer of the American Society of Travel Agents, said she expects "a guessing game. It's going to be shooting from the hip. . . . Every way you look at this, the consumer gets hurt."
The airlines disagree, of course, and are urging travelers to call their 800 numbers and make bookings directly.
Until this month, a travel agent booking a domestic flight could usually count on a 10% commission from the carrier. Under the new cap, Delta (which started the trend), American, Northwest, United, USAir and Continental (still others may follow) are imposing commission ceilings of $50 on round-trip tickets, $25 on one-way tickets. Thus an agent who books a $1,200 round-trip will make $50 instead of $120; an agent who books a $400 one-way flight will make $25 instead of $40. Delta officials have estimated that the new cap will affect just 20% of the Delta tickets sold by agents, but agents say the figure could be three times that for some agencies. (The commission cut also means widespread renegotiation of corporate travel management contracts.)
The new bottom line, said Christine Levite, spokeswoman for American Express Travel Related Services, is that "agencies can no longer sustain themselves on the commissions that airlines are offering."
The commission cap is only the latest in a series of recent developments that have undercut the position of this nation's 32,000 travel agencies--not only strategic moves by airlines, but also technological advances, especially in household on-line services.
One clue to future agency fees is an experiment that American Express was set to begin even before the new wave of commission-cutting intervened. That program was to have tested service fees of $5-$25 in three unnamed major U.S. markets, setting a minimum booking threshold of $200-$300. Any first-time customer buying an air ticket costing less than that would face a service fee. The first fees were expected by the end of March.
Since last week's commission-cut announcements, Levite says, American Express officials have been weighing substantial changes in those plans, possibly including a simultaneous widening and acceleration of the test program. Whatever American Express does will have immense influence on other travel agencies; the company logs an estimated $12 billion in annual air fares, accommodations and other bookings worldwide.
In any event, consumers should remember the value of an adept travel agent. "There's nothing that comes even close to the travel agency computers as a way to do comparison shopping among air fares," Perkins says. Even if you have an on-line computer service that allows fare browsing, Perkins notes, "some of those services are awfully slow."
Consumers should remember that it was the airlines who developed the system of fares that now befuddles so many consumers, and that it was eight major U.S. airlines that the U.S. Justice Department accused of illegal price-fixing in 1992. (The airlines settled without admitting guilt.)
"The last week has confirmed the fact that the airline industry is incomprehensible to most people," observes Levite. "In an industry that has 100,000 air-fare changes every day, you need someone to be your broker."