NEW YORK — United and Delta will slash travel agents' commissions on domestic airfares, mimicking the cost-cutting measure initiated by American Airlines late last week.
Analysts said the reduced commissions, announced by both airlines on Wednesday, which apply for all tickets sold in the United States and Canada. The move could save United parent UAL Corp. about $78 million a year and Delta Air Lines Inc. about $51 million.
Other carriers are expected to follow the change, which comes in the form of a lower cap on commissions, as a way to encourage consumers to buy airline tickets over the Internet, a much cheaper distribution channel.
It is the sixth time since 1995 that airlines have either lowered the cap or reduced the base rate on commissions to travel agents. The action comes at a time when major carriers have been mounting huge losses because of reduced spending by corporate travelers.
"We estimate these caps will save approximately 8 percent to 11.5 percent in annual commission expenses for the industry," said Salomon Smith Barney analyst Brian Harris. That would add up to roughly $365 million before taxes in 2002.
Travel agents said U.S. consumers will ultimately foot the bill.
In separate press releases, United and Delta said they would begin capping payments to travel agents in the United States at $10 for a one-way ticket and $20 for a round-trip flight, instead of $25 and $50, respectively.
Canadian travel agents will be capped at about $9 for one-way tickets and $18 for round-trip, instead of about $23 and $46, respectively.
Travel agents will still be paid a base commission of 5 percent for all one-way tickets $200 or less and round-trip fares $400 or less.
Richard Copland, president of the American Society of Travel Agents, said travel agents will respond to the lower commissions by increasing their clients' transaction fees.
"The ultimate loser here is the traveling public," Copland said. "The travel agents will survive."
Copland said ASTA is asking some 15,000 travel agencies around the country to close their offices next Thursday for two hours in order to educate the public about "the growing threat of the airlines' war against unbiased sources of travel information."