United Cuts Travel Agent Commissions
UAL Corp.’s United Airlines, the largest U.S. carrier, said Thursday it is cutting the commissions it pays travel agents to save $150 million annually as the industry sells more tickets directly to customers.
The airline said it will reduce commissions to 5% from 8% on U.S. and international flights today. It will pay agents no more than $50 on tickets purchased in the U.S. for round-trip domestic flights and $100 for international flights.
U.S. carriers are encouraging travelers to book flights directly over the Internet as one way of reducing commissions paid to travel agents. United and other carriers cut the commission rate to 8% from 10% in September 1997, then reduced the caps on commissions last November.
AMR Corp.’s American Airlines, the second-largest U.S. carrier, and No. 3 Delta Air Lines Inc. declined to comment on whether they would also cut rates. American said it was evaluating United’s action.
The American Society of Travel Agents called United’s rate cut “the most anti-consumer move in airline history.” The reduction will lead to less consumer information and, most likely, higher ticket prices, the group said.
The association’s chief executive, Joe Galloway, said the group will meet with legislators and other government officials to explain the impact of the commission reduction and to urge their intervention.
United and other carriers have seen profits slide this year as competition on U.S. and European routes increased and demand in Asia and Latin America failed to recover.
About 83% of United’s revenue is from tickets sold through travel agents, with the rest coming from Internet distribution, by phone and through tour operators and resellers of tickets bought in blocks, said United spokesman Joe Hopkins.
