By Ron VandenBoom
A 50 percent reduction in commissions paid by the nation's airlines to travel agents is forcing many out of the business and others to add consultant fees to airline ticket sales.
Havre travel agents Teresa Brown and Tracey Warburton run Magic Carpet Travel in Havre, one of the agencies that has been forced to tack consultant fees onto the the price of tickets.
The fees will add $10 per airline ticket for one to four passengers and $10 per copy of a previously issued ticket. This fee also will apply to any research involving frequent flyer accounts.
"Over the last two years, the airlines have reduced our commissions by 50 percent," Warburton said. "I don't know why they did it because the airlines made record profits last year."
The airlines would pay travel agents a flat 10 percent of the cost of a ticket under the old system of payment.
For example: If the price of a ticket was $1,000, the agent would make $100 in commission. After the recent cuts, the same $1,000 ticket means a $50 commission will be paid.
According to Brown, 50 percent or more of most travel agency business is in airline ticket sales. The reduction would thus cut most agencies' income by about 25 percent.
The reduction in commissions was a trend the airlines started about four year ago, said Jacky Gerking, owner of Lelok Travel in Havre.
"This was the fifth cut since 1995," she said. "What they want to do is eliminate the agencies and get people familiar with booking on-line.
"The reason why is because you are not going to have another view. They're just going to give you what their airline is selling. They're not going to tell you this other airline is having a sale."
Gerking will add a $10 fee on the cost of her tickets beginning Nov. 15, and predicts this last cut by the airlines will close between 50 and 60 percent of existing agencies.
"I've tried to abstain from charging a fee for as long as I could," she said, "but with this last one I just had to."
A $10 fee has been in place for more than a year at Morris Travel, formerly Anderson-Elerding, said Kris Holmlund, area manager for the company. "And we're thinking of raising it again," she said.
Holmlund said customers have been really understanding about the fee and don't mind paying for the service when they know they are dealing with travel agents who know what they're doing.
Warburton said it was the airlines that originally set up the travel agency system because it was cheaper for them to pay agencies 10 percent of the cost of a ticket than for the airlines to hire employees to handle all the ticket sales.
But today, Holmlund said, the airlines understand the Internet is the wave of the future. The Internet eliminates the need for airlines to continue supporting travel agencies. Making reservations on-line costs the airline little or nothing and, according to Holmlund, the savvy Internet user can find rates cheaper than those available by using a travel agent.
Gerking said so far she doesn't believe the Internet has had that much impact on the market, but the fewer agencies there are the greater the likelihood the Internet will have to fill the gap.
"Nor will they be able to change reservations en route, keep track of frequent flier miles, or call you to let you know if the rates go down after you have already purchased the ticket," Gerking said, referring to airlines and the Internet. "(Agents) are going to take care of you from the moment you buy the ticket till you use it."
"Travel agents can still make consumers a good deal by being able to make the best price possible on a ticket," Warburton said. "Agencies develop a clientele. You learn what a person likes and what their needs are."
"That's why the Internet has not affected the business much yet," she said.
Agencies also offer travel packages, tours, ship cruises, and Amtrak tickets, but the airlines still compose the bulk of their business.
One glimmer of hope for the travel industry came in October when Sen. Conrad Burns (R-Mont.) announced he is considering an amendment to the FAA reauthorization bill that would stop airlines from dropping their commissions below eight percent.
Whether the amendment will pass the strong opposition offered by the airlines is unknown at this time. How long it may take to pass an amendment is also unknown.
But Havre agents are hoping it is the answer to a prayer.