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Augusta, Ga., Travel Agents to Increase Fees on Airline Tickets Sold.
10/27/1999
Oct. 28 -- Local travel agents will increase fees on the airline tickets they sell to travelers now that airlines cut their commissions for the fourth time in as many years. The service fees, which are paid directly by travelers, are necessary to replace revenue lost from the cuts, travel agents said. The most recent cut came Oct. 7 when United Airlines lowered the commission it granted travel agents from 8 percent to 5 percent. Delta Air Lines and U.S. Airways followed soon after. Augusta Travel and Aladdin Travel both report they will soon include service fees to cover their losses from the most recent commission cut. Area travel agencies that already charge service fees say they may increase their charges. Service fees usually range from $10 to $20. "The airlines' goal is to provide air fares at no commission and to let the travel agents become creative and figure out how to make a living through other services they provide," said Michael Kerbelis, chairman of Southern Travel Agency, the largest travel service provider in Augusta. "I look at it as a challenge." Southern Travel has charged a service fee for the past three years, Mr. Kerbelis said. The first major cut came in February 1995 when airlines, led by Delta, for the first time capped the 10 percent commissions travel agents could earn on domestic flights at $50 round-trip and $25 one-way. Two years later, in September 1997, United Airlines reduced commissions from 10 percent to 8 percent, and others followed. And in November 1998, international commissions were capped at $100 round-trip and $25 one-way, a movement also led by United. Can't find what you need? Try a Google Web Search in the box below!
Augusta Travel is writing letters to its clients to tell them about new service charges, said Al Stewarb, sales and service manager for Augusta Travel. "I can't think of any company who could survive without it now," he said. United Chairman Jim Goodwin has said that the latest commission cut will create a cost savings of $150 million annually. Airlines will neither confirm nor deny that the cuts are connected to an increase in online bookings. "We continue to have daily interaction with the travel agency community," said David Castelveter , spokesman for U.S. Airways. Travel agents say cost savings are seldom passed along to consumers. The recent cuts represent a 38 percent reduction across the board in airline ticket revenue. "We have to do something to make up for the deficit," said Dan Gordon, manager of Morris Travel. "When you lose 38 percent of your spendable income, that's a lot for anyone to absorb." Morris Travel is evaluating a possible increase in its service charges, Mr. Gordon said. An estimated 80 percent of airline tickets are sold through retail travel agencies.
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