The U.S. government hopes to prop up suffering airlines at the expense of another profession – travel agents. The Department of Transportation says it is considering outlawing “incentive fees” that computer-reservation systems pay to encourage agents to use their networks.
The department says it considers those fees anti-competitive, said spokesman Bill Mosley, and getting rid of them could shift more money to airlines.
“This is pretty much a federal bailout using private money,” said Paul Ruden, senior vice president for legal and industry affairs for the American Society of Travel Agents.
There are about 200,000 travel agents nationally, Mr. Ruden said, but their numbers are threatened by Internet sites and economic woes. Incentive fees often help the agents make ends meet, he said. He added that computer reservation systems, or CRSs, are very competitive, because they battle each other -with fees as a weapon- to lure more customers.
One of the largest CRSs, Sabre Holdings Corp., said the new rules could end up raising customer fees. “The department of transport rules make no sense. The market is working; the airlines are getting reduced fees and customers are getting lower prices,” said Bruce Charendoff, Sabre’s senior vice president for government affairs.
Travel agents plan a protest in Washington as we go to press, as the department of transportation clears the rules with other government agencies. If passed, the regulations would go into effect early next year.
The proposed rules are a case of adding insult to injury for many travel agents. The Internet is doing a fine job cutting into their business without any government assistance. In the 1980s, 90 percent of all flights were booked by CRSs. Today, it’s only 53 percent. Still, Mr. Ruden was confident that many travel agents would survive as they turn to niche markets like “adventure travel” and provide all-around event planning for large corporations.