Do Travel Agents Work for the Airlines or Us?

What good is a travel agent? You might as well ask what color fruit is. It depends on the agent and the tree. Sometimes you get peaches, and sometimes you get lemons.

For further evidence, see the study published this month by Consumer Reports Travel Letter. Its findings suggest that if you call a travel agent out of the blue to ask for a fare, you have about a 50% chance of getting a wrong or “incomplete” answer--that is, being told about a fare that isn’t the lowest or, more often, not being told about all the airlines offering the best fare. The report was based on telephone conversations with 840 agents nationwide.

Richard M. Copland, the president of the American Society of Travel Agents, based in Alexandria, Va., denounced the report, saying that it casts unfair aspersions on agents and oversimplifies the complex fare-seeking process. He also suggested that an analysis of actual bookings, rather than telephone conversations, would have been more valid.

But the results do raise thorny questions--especially given that an estimated three-fourths of airline tickets are sold through travel agents--and they underline an enduring consumer truth: It pays to shop around. A good travel agent is still “probably the most valuable source there is,” says Bill McGee, editor of Consumer Reports Travel Letter.

If you’re seeking that ideal agent, the search takes the same tenacity as finding a mechanic or a dentist: You learn a little about the basics of the business, you get references from friends and relatives, you learn from trial and error, and you get a second opinion if something strikes you as iffy.

The survey was designed to test how often agents give complete and unbiased information on fares. Working from scripts, the researchers called 840 agencies, asked a series of fare-quote questions, then compared their responses with simultaneous reviews of the Sabre and Apollo Galileo computer reservations systems, which display fare data that agents use.

Nearly half of the agencies called gave incomplete answers to a customer’s first query about low-fare flights.

“Only 51% immediately provided complete airline and pricing information after we asked for all the lowest-fare nonstop options on 12 different routes,” the report said. “This figure rose to 63% after we repeated the request. But 25% of the agencies failed to mention all of the lowest-fare flights even after the second request. And 12% did not provide the lowest-fare options at all.”

For fares between LAX and Las Vegas, researchers called 79 agencies, mostly in and around Los Angeles, of which 70% failed to identify all the airlines offering the lowest available fare.

For fares between Denver and LAX, researchers called 70 agencies (mostly in and around Denver), of which 61% failed to identify all airlines offering the lowest fare.

For fares between Chicago and John Wayne Airport in Orange County, researchers called 100 agencies, of which 23% failed to identify all the airlines offering the lowest fare. (The test excluded Internet-only fares, which travel agents usually can’t see on their computer reservation systems.)

Why would so many agents be wrong?

There was no substantial difference between larger and smaller agencies. Some misquotes could be blamed on an agent’s lack of knowledge, the travel letter noted. After all, like consumers, agents face a market of constantly fluctuating prices and competition among the 10 major carriers and many other smaller carriers. In some cases, motivation could play a role. (As the researchers acknowledged, agents know that their odds of making a booking with a stranger on the phone aren’t nearly as good as with a familiar face in front of their desk.)

“I will grant you that there are some lazy agents out there.... But our lifeblood is the return customer,” says Steve Loucks, a spokesman for Minneapolis-based Carlson Wagonlit, one of the nation’s largest agencies, with annual sales of $13 billion worldwide.

But the problem could be more systemic. For decades, airlines have paid travel agencies “override” fees (beyond their normal commission rates) to reward them for selling seats on highly competitive routes. Thus, in a two-carrier market, agents sometimes can make more money by recommending the airline that pays them more, rather than the one whose fare is lower. In the Denver-LAX market, for example, an agent might mention the lower United Airlines fare and fail to mention an identical fare offered by Frontier Airlines, McGee says.

Because airlines and agencies typically make confidentiality a condition of their override agreements, there’s little for a consumer to see or read on this subject. ASTA’s Copland said the agreements are most common among large travel agencies like American Express and Carlson Wagonlit, and usually give the agency an extra 1% to 3% in commission revenue above the industry’s going rate.

Many agents and agency officials, like Loucks of Carlson Wagonlit, dismiss the idea that overrides could taint agents’ advice, saying they would be out of business if they didn’t put customer satisfaction first. But for consumer advocates like editor McGee, the largely undisclosed nature of the overrides raises questions. The newsletter’s parent organization, Consumers Union, has asked the U.S. Department of Transportation to require that travel agencies tell consumers if they have preferred relationships with particular suppliers.

“We’re not looking to find out how much [the agencies] get paid. We just feel that the consumer should know this agency has some sort of agreement with United Airlines or American Airlines or whoever,” McGee says. “We’d like some disclosure because there’s a lot going on there that the consumer’s just not aware of.”

Department spokesman Bill Mosley notes that there’s no law requiring agents to disclose their override arrangements. But, Mosley says, it would be a deceptive practice (and hence illegal) for an agency with override agreements to deny that it had them.

When researchers asked travel agencies about override agreements, the newsletter reported, “Many agents refused to answer. Some were rude and hostile. Only about half responded ‘yes’ or ‘no,’ and overall 20% acknowledged they have such deals.” (ASTA’s Copland said that most travel agents have no such deals, but McGee and others say industry-wide figures are not available.)

ASTA’s CopIand says the association makes no recommendations to its members on how they should handle disclosure of override agreements. He compares the practice to the retail business, in which big brands often offer stores incentives in exchange for prominent placement. “They’re taking something that’s purely American and trying to make it un-American,” Copland says.