TWA May Return to Travel Agent Commission Standards

TWA, one of the airline industry’s weakest carriers, may break ranks with rivals and scrap a three-month-old policy of limiting travel agent commissions, people familiar with its position said Thursday.

Such a move could benefit TWA by making travel agents funnel clients to TWA flights, and would cost the carrier relatively little since its share of the market is small compared to healthier rivals such as American and United.

If TWA abandoned the limits, that could severely undermine the airline industry’s broad move to reduce costs by limiting the amount of money paid to travel agents, who sell the bulk of airline tickets in this country. Other airlines might follow TWA’s lead to avoid losing business.

The travel industry revolted over the limits and sued the airlines to rescind them, arguing that many agencies would fail under such a change because it would severely reduce a critical source of revenue.

The airlines had long paid commissions equal to 10% of the cost of the ticket. But that changed in February when the airlines began capping the commissions to a maximum of $50 for any domestic ticket exceeding $500.

People familiar with the lawsuits over the commission caps, who spoke on condition of anonymity, said TWA is negotiating with attorneys for the agents about a possible settlement.

The airline would return to its prior commission standards if the agents’ suits were dropped, these people said.

“There is some talking between sides as there would be in any case,” one said. “But there has not been any settlement yet.”

TWA spokesman Don Fleming said there was no deal in the works, but Michael Brent, president of Travel Network Ltd., which filed the first suit against the airlines, said he has heard unconfirmed reports that some talks were underway.

“I got wind of it yesterday and it doesn’t really surprise me,” he said.

Travel Network, based in Englewood, N.J., operates 350 agencies nationwide.

There had been speculation within the travel industry that the airlines would eventually buckle under to pressure from the agents and return to the 10% commissions.

The American Society of Travel Agents estimates that agents booked about 171 million airline tickets last year, or about 85% of the total.

Most major airlines declined to comment on the case.