An ongoing dispute between some Salt Lake travel agencies and the dominant air carrier, Delta Air Lines, may force federal regulations on the travel industry nationwide.
At least that's what members of a congressional subcommittee and the travel industry hope for, after a hearing Monday at the State Office Building."I hope this can start a movement for more fairness in the industry, using the examples here," said Paul Bessel, president of the Association of Retail Travel Agents.
Bessel, who said the industry is closely watching the Salt Lake controversy, was among 14 witnesses testifying before the House government activities and transportation subcommittee investigating the allegations of unfair competition in the Salt Lake travel market. The hearing was in Salt Lake City because of the controversy in the city and because the subcommittee's ranking Republican is Utah Rep. Howard Nielson.
Nielson has given special attention to a case filed with the Department of Transportation two years ago by a group of 23 small, independent travel agencies along the Wasatch Front.
The group, called the Independent Travel Agency Alliance, accused Delta of cutting exclusive deals on fares with Salt Lake's "Big Three" travel agencies - Morris/Ask Mr. Foster Travel, Murdock Travel and Beehive Travel. ITAA contends those deals, combined with Delta's Salt Lake hub operation dominating air travel, put its members at a competitive disadvantage.
The deals were made as inducements to get the "Big Three" to switch their computer reservation systems to Delta, witnesses said, and to reward the large agencies for their sales performances.
But the complaint was dismissed by DOT for lack of evidence. DOT ruled that ITAA failed to show that the agreements between Delta and the "Big Three" violate federal rules governing the travel industry.
"In general, the practices mentioned in the complaint are commonplace in the industry and have been for some time," Samuel Podberesky, a DOT attorney, told the subcommittee.
Nielson didn't like that answer, nor DOT's treatment of the complaint. He sharply criticized DOT for dismissing the complaint in November 1988, then not issuing the order for 15 months.
Despite DOT's dismissal, Nielson apparently won't let the complaint die. Although they didn't indicate what changes may come, Nielson and subcommittee chairwoman, Rep. Cardiss Collins, D-Ill., said after the hearing that they plan to get DOT through negotiation or legislation to establish rules overseeing the use of computer-reservation systems and the business relationships between airlines and travel agencies.
"Just because it's not against the law doesn't mean it's fair," Collins said.
New rules could change business practices developed industrywide since deregulation more than 10 years ago.
Representatives of Delta and the "Big Three" travel agencies said that offering special deals to high-volume vendors is common and they didn't consider it illegal or unfair.
But Bessel said the travel industry is different. He said the airlines dictate the retail price of their product and thereby have direct control over an agency's sales volume. If airlines give discount fares to just some agencies, it makes it difficult for the others to compete and increase their volumes because they have to sell at a higher price.
While the situation exists nationwide, it is particularly acute in Salt Lake City.
No other cities have three agencies and an airline dominating the marketplace, Bessel said, making it nearly impossible for smaller agencies to build a market share when the three large-volume agencies are given special treatment. He said the decline in the number of small, independent travel agencies in Utah bucks the national trend of growth and doesn't bode well for Utah consumers.