In the early 1970s the major airlines in the United States devised a plan to change airline travel forever. First they had to talk the federal government into deregulating their industry. At that time the government regulated who carried the U.S. mail, all fare increases and other important consumer issues regarding airline passenger transportation. It took more than 10 years to accomplish this, but in 1983 their first phase was achieved.

Next, they set out to implement phase two. This phase consisted of driving weak carriers out of business or into Chapter 11 bankruptcy, thus effectively halting major competition both domestically and internationally. They also derailed a few new discount airlines along the way.Having succeeded in this phase, the remaining major carriers divided up the domestic airline route system to their liking and then proceeded to phase three. The major airlines now intend to control the consumer's point of sale for all airline tickets.

They began by limiting commissions paid to retail travel agencies. At first, they stated that they could no longer afford to pay agencies full commission on expensive unrestricted tickets and international tickets. That was a blow to corporate travel agencies, and there was a major ripple effect throughout the retail industry. Within one year the airlines cut all commissions on tickets from 10 percent to 8 percent.

The retail agencies rebounded with service fees to clients and added special services to business accounts. Most leisure bases agencies began to look for more business in the package, cruise and group markets. The nation as a whole, however, lost approximately 15 percent of its storefront retail agencies.

The airlines then began to develop points of sale they could and do completely control. Examples of these are (1) Internet sales: Where carriers can dump last-minute unsold seats at discount prices. (2) Consolidator sales: These companies receive contracts from carriers to sell tickets at discount rates. (3) Cruise line and package operators. The airlines contract rates, which can be offered in connection with their products.

The only facet they have no control over is the retail travel agency. They are the only point of sale that serves only you, the passenger. Retail agents work to ensure their clients the best possible price on airline tickets. They search all carriers to offer clients their very best options. If the airlines could contract with retail agencies for their business, they would be happy to pay the commission they deserve. They have negotiated contracts with large national chain agencies to ensure they sell only contract carriers and not discount airlines, charter or consolidator tickets. Again, the airlines want to force the public to buy what they dictate and at the price they set.

At one time, retail agencies could boast of selling 87 percent of all airline tickets. In today's market that percentage has dropped to about 64 percent. The airlines have allowed major corporations to have their own travel departments to which they pay no commission. They account for approximately 10 percent of ticket sales. The Internet and consolidators account for about 15 percent, and the airlines sell the remaining 9 percent.

You can see the problem here. From the airlines' standpoint, there are just too many tickets being sold without their control. Control is the key issue here. We all saw how quickly they reacted when the federal government threatened to step in and enact the Passenger Bill of Rights to protect air travelers. They instantly devised their own plan for increased customer service and better on-time performance. The last thing they want is the federal government becoming involved in their business.

View Comments

Now if they can just get a handle on that 64 percent point of sale. Recently they made a huge step in that direction. At a time when all airlines are enjoying record profits, they dropped the commission rate paid to non-contract independent retail travel agencies. This time it fell from 8 percent to 5 percent without any explanation. With this most recent cut in commissions, it is estimated that of the 12,000 or so retail agencies in the United States, approximately 3,500 will close by mid-2000. This is an astonishing figure and one we should all be concerned with. The travelling public is being denied access to a valuable asset. Anyone who travels by air will within the next five years be given little or no option to check prices or be alerted to airline sales.

One has to question the legality of offering different prices for tickets based on a person's access whether it be the Internet or some other point of sale. Not everyone has access to the Internet or a credit card for payment. Should they pay more for their tickets?

Now is the time for each of us who travel to become involved with our future. Do you really think the airlines offer you anything that is not to their benefit? If they control the retail travel industry, you will have no voice and soon no choice. It's time to exercise the power we all have. Write your congressmen and voice your concerns over this issue. You can make a difference.

Brenda K. Jorgenson is co-owner/president of Westgate Travel in Sunset.

Join the Conversation
Looking for comments?
Find comments in their new home! Click the buttons at the top or within the article to view them — or use the button below for quick access.