2 Airlines Join Delta in Commission Cuts

AMR Corp.’s American Airlines, the world’s largest carrier, and Continental Airlines Inc. said Monday they matched Delta Air Lines Inc. and stopped paying basic commissions to domestic travel agencies, making it all but certain that the rest of the airline industry will follow.

Although other airlines eventually were expected to adopt Delta’s change, American and Continental waited only four days before saying they no longer would pay a basic commission for tickets issued by agents in the U.S. and Canada. Most carriers had been paying a maximum base commission of $20 for a round-trip ticket.

The rest of the airlines--which collectively are forecast to lose an additional $3 billion this year as air travel slowly recovers from Sept. 11 and the recession--will take the same step “sooner rather than later,” said Richard Bittenbender, an analyst at Moody’s Investors Service.

Richard Copland, president of the American Society of Travel Agents, said the cutoff was expected and that agents will sell fewer tickets, “at least in the short term,” without the commissions.

Agents also will start charging travelers higher fees to book seats.

“The one who’s going to get the short end of the stick is the traveling public, because what the airlines are doing is raising the price of airline tickets indirectly,” said Copland, whose group represents 26,000 agencies.

American and Continental, the nation’s fifth-largest carrier, declined further comment.

The airline industry “is trying to return to profitability, and if there is any way they can see to lower costs or increase their revenues without affecting passenger traffic, they’re going to take it,” Bittenbender said.

The airlines had shaved commissions several times in recent years to save money. The carriers also have pushed travelers to book via the Internet.

American last year spent $835million on commissions, down 20% from $1billion the prior year. Some of that decline reflected the plunge in air travel after Sept. 11, but part also stemmed from commission cuts.

Like Delta, American indicated it will keep paying bonus commissions to agents who drum up exceptional business. To survive, some agencies probably will merge to generate the ticket sales that will earn those bonus fees, analysts said.

At Carlson Wagonlit Travel, a Minneapolis-based network of 1,400 travel agency offices, spokesman Steve Loucks said agencies will have to focus more on planning vacation packages and providing other niche services. He also said nearly 100 agencies have joined the Carlson Wagonlit franchise in the last six months to boost their sales. Once they join, they are treated like one large operation and entitled to the same preferred relations with airlines, he said, adding: “It’s really become more difficult to go it alone out there.”

Times staff writer Bonnie Harris in Orange County contributed to this report.