5 April 2002 (Part 2 of a series - Part 1 here)
The recent announcements by major US carriers that they have stopped paying commission to travel agencies has generally been seen as an airline vs agency issue.
But maybe there is another issue as well, one with ugly overtones for the future competitive health of the entire airline industry.
This is part two of a series discussing the impacts of zeroing travel agent commissions on you, the traveler. Part One can be viewed here.
The major airlines hate 'rogue airlines' even more than they hate travel agents! Some commentators believe that by abandoning the Saturday night stay requirement, America West has now become a 'rogue airline' and is attracting the ire of the major carriers. Support rogue airlines! Fly America West if you have the opportunity.
Airline vs Airline?
You might think that when the major airlines zeroed the commission they pay to travel agencies, they were simply trying to squeeze out travel agencies. That may well be part of their strategy. But read now about another target of their new zero commission policy - other, smaller, airlines (which are usually the ones with the best discount fares and service)!
Squeezing out the Smaller Airlines
What do big airlines hate more than anything else in the world? You might think the answer is 'passengers'! Or, in view of their chronic losses, perhaps the answer is profit! Some of you will probably suggest that the airlines hate travel agents more than anything else.
Let me suggest another answer to you : The thing that big airlines hate, more than anything else in the world, is competition from new upstart small airlines. They hate competition from any airline that doesn't 'play by the rules'. Rules such as outrageous fares if you don't stay over a Saturday night; a growing and ridiculous spread between the prices charged for the exact same seat depending on if the airline thinks you're a deep-pocketed business traveler or a miserly vacationer; rules that all but imply that the airline can treat you as poorly as it likes and if you as much as complain about it, then you'll risk being banned for life from the doubtful privilege of flying them again!
What Happens if an Airline Breaks the Unwritten Rules?
Here are two examples.
America West is struggling to maintain viable profitability. It decided to drop the requirement to stay over a Saturday night to qualify for its cheaper fares - this being, of course, one of the key founding 'rules' of the major airlines' fare structures. Its fares for such itineraries are now only one third to one quarter of the fares charged by the major carriers!!! Guess what happened? In what USA Today described as being 'thrown out of the club for breaking the rules' Continental 'coincidentally' announced, two days later, that it was ending its eight year code-sharing, lounge-sharing, and frequent flier associations with America West! America West is now looking for another major airline partner to ally with (and do you want to guess at how successful it will be?).
Another interesting thing happened to America West just yesterday. Orbitz - the website jointly owned by several of the major zero commission carriers - suddenly started charging a $5 fee on any America West tickets it sells. Why do you think they started doing that?
JetBlue is an example of a new carrier that is doing all the right things perfectly (and breaking all the big carriers' rules in the process!). It recently started operating coast to coast service from Oakland and Long Beach airports. Guess what. All of a sudden, American Airlines suddenly starts offering the same service on the same routes. And Long Beach airport, long the 'ugly stepchild' of the LA airports, is now inundated with too many requests from carriers for slots. Is this just a coincidence, or has JetBlue now appeared on the 'big guys' radar screens and are they trying to squash it?
We can all of us name any number of new discount carriers that have started business, first servicing second level city pairs with discounted flights - routes that other airlines have ignored or offered only vastly overpriced service on, only to have the big guys suddenly descend upon them, and match them, flight for flight and fare for fare until the new carrier is bled dry and disappears. And what happens next? Do airfares stay low? Of course they don't!
