February 22, 1995 in Nation/World

Travel Agents Challenge Fee Cap Trade Group Accuses Airlines Of Price-Fixing For Lowering Commissions On Tickets

Associated Press
 

The world’s largest organization of travel agents accused the nation’s major airlines Tuesday of price-fixing for reducing commissions on domestic airline tickets.

The American Society of Travel Agents Inc. plans to file a class-action antitrust lawsuit against the major U.S. airlines, seeking a permanent injunction against capping commissions and asking for damages equal to triple any losses travel agents incur from reduced commissions.

ASTA hasn’t determined when and where the lawsuit will be filed, nor which airlines will be defendants.

The move follows the announcement earlier this month by virtually every major U.S. airline to limit commissions. Citing a need to cut costs in the face of competition from low-budget carriers, the airlines said they will now pay agents up to $25 on one-way domestic tickets and $50 for round trips, instead of the long-standing 10 percent commission per ticket.

The airlines said commissions are their third-biggest expense, totalling $6.28 billion last year.

The travel agents said the limits could hurt their businesses. Travel agents last year booked about 171 million airline tickets, or 85 percent of the total, ASTA says. Commissions from those tickets account for about two-thirds of the average agent’s income.

At a news conference at its headquarters in Alexandria, Va., ASTA also said it would ask the Justice Department to seek a restraining order against the airlines, urge the Transportation Department to issue a cease-and-desist order and seek Small Business Administration loans for financially strained agents.

The group will also launch a national ad campaign Friday to gain consumer support.

At least two lawsuits over the caps were already filed against major airlines - one by Travel Network Ltd. of Englewood Cliffs, N.J., a franchiser of 350 travel agencies worldwide, the other in San Francisco by a California agency called Management Travel Consultants.

Some consumer groups have come out for the new commission caps.

Stephen Brobeck, executive director of Washington-based Consumer Federation of America, said the current system does not always encourage agents to get customers the lowest fares. He said consumers would willingly pay fees for good service.

© Copyright 1995 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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