Airlines Stop Paying Commissions to Agents

Following Delta’s lead, several major U.S. airlines this month eliminated most commissions paid to travel agents for domestic tickets. The American Society of Travel Agents denounced the move as “anticonsumer.”

Citing the need to reduce costs after a billion-dollar net loss in 2001, Delta on March 14 ended commissions on domestic tickets sold in the U.S. It continues to pay foreign sellers of airline tickets. The company said it would continue “individually negotiated incentive commissions to select agents” but did not elaborate.

Within a week American, America West, Continental, Northwest, United and US Airways took similar action. Most would not discuss the issue further, so it was not clear whether they would offer incentive commissions. America West said it would offer commissions of up to 5% to agencies “in exchange for booking more of their business on America West.” Air Canada said it would end commissions in April.

On March 21, the day after United ended commissions, online travel seller Travelocity, www.travelocity.com, began imposing a $10 service charge on United tickets. A spokeswoman said Travelocity had negotiated compensation with other major airlines and objected to “working for free” for United. Competitor Expedia, www.expedia.com, briefly demoted United to the bottom of its displays, without listing fares, then resumed normal displays. An Expedia spokeswoman declined to explain the actions except to say that United was now compensating the online agency for selling its tickets.

Before cutting commissions entirely, major U.S. airlines had gradually cut them back, starting in 1995. Travel agencies, which began adding service fees after the cutbacks, are widely expected to raise them.