SF Gate: 2 airlines halt fees to agents

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This article was sent to you by someone who found it on SF Gate.
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/19/BU165506.DTL
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Tuesday, March 19, 2002 (SF Chronicle)
2 airlines halt fees to agents
David Armstrong, Chronicle Staff Writer


   In a move that will hike travel costs for millions of passengers, Americ=
an
Airlines and Continental Airlines yesterday became the latest carriers
that will no longer pay any commission to travel agents who sell domestic
air tickets.
   The action by American, the world's largest airline, and Continental, the
fourth largest, follows a decision four days ago by Delta Air Lines, the
third largest, to end its commissions for tickets sold in the United
States and Canada.
   Travel agents said they will have to raise service fees for clients to
replace revenue that no longer comes from the airlines, which have
steadily reduced commissions during the past seven years. Some 80 percent
of all airline tickets are sold through travel agents, the rest by the
airlines themselves.
   United Airlines, the largest carrier at San Francisco International
Airport,
   refused to comment on whether it would match the move by the other
carriers.
   As a result of the move by three of the nation's four largest airlines,
travel agents will be forced to charge higher service fees for clients,
said Paul Silvera, chief operating officer of Uniglobe International, an
agency based in Vancouver, British Columbia
   Agencies said they will raise service fees from a current average of $25
to as high as $50, according to Silvera, who said his agency will scale
the increase to the client and his situation.
   Uniglobe, a midsize agency that specializes in business travel, has
downsized its San Francisco office from 28 agents to 15 due to slumping
demand,
   especially since the terror attacks of Sept. 11, Silvera said. "We were
just beginning to recover this quarter."
   Shrinking revenue has driven some 20 percent of America's travel agents
out of business in the past few years, according to Terry Regan, owner of
Berkeley Northside Travel.
   However, the more nimble agencies should survive, he said, because regul=
ar
fliers have come to trust agents and rely on additional information that
they can't get from the airlines themselves, such as who is selling the
very lowest fares on competitive routes.
   "Agencies will probably have to raise fees a little," acknowledged Paul
Ruben, senior vice president for legal and industry affairs at the
American Society of Travel Agents. "But agents were only getting a 3
percent commission with a cap of $20 per ticket anyway. We're still going
to be there, doing our job."
   The elimination of commissions comes as cash-strapped airlines, which
registered a record loss of more than $7 billion in 2001 due to the
terrorist attacks and the slumping economy, are combing for ways to reduce
costs.
   "Ticket distribution is the only one of the four major costs the airlines
have real control over," said David Stempler, president of the Air
Travelers Association. The other three -- labor, fuel and aircraft -- are
more complex, he said.
   United, for example, barely averted a damaging strike by its mechanics
this month but still plans to ask all its employees for difficult
givebacks on wages and benefits.
   "The people who feel the need for the services of a travel agent should =
be
willing to pay for it in the form of service fees," Stempler said. "You
ought to pay for what you use, but not pay for what you don't use."
   E-mail David Armstrong at davidarmstrong@sfchronicle.com.=20
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Copyright 2002 SF Chronicle

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