Part 2 Cont.

But what has this got to do with paying travel agents no commission?

Travel agents give all airlines a level playing field. Every airline, big or small, has equal access, through the travel agent's computer, to the travel agent's clients.

That means that a brand new startup airline immediately gets the same equal access to all travel agent clients, just the same as the major airlines, with the need for massive advertising budgets and long operating histories. Only a few years ago, travel agents sold almost 90% of all airline tickets in the US (and today they still sell 70%) - travel agents were a key part of enabling new carriers to start selling their services.

Do you think the big airlines are happy seeing new startup carriers getting immediate equal access to 'their' markets? No, of course they don't like this!

And now for a 'cunning plan'. What is the best way to make it harder (almost impossible) for new startup carriers to immediately get the equal access (that they are legally entitled to and which they deserve) to 70% of the flying public? Yes - kill off the travel agencies! If there are no more travel agencies, then how will new airlines sell their tickets? What use is a website or a toll-free number if no-one knows about it? What use are they if no-one knows that your airline exists, or what flights it operates, and to where?

Without travel agencies to fairly offer and sell their flights, what is currently a very difficult task (starting a new airline) becomes, surely, almost an entirely impossible one!

Possible Proof that I am Correct

I should state the obvious. The preceding is entirely my personal opinion. I might be dead wrong, overly paranoid, and unfairly attributing hidden motives to something that is just a simple straightforward decision. And, of course, I offer any and all senior airline executives equal space to rebut my comments and to explain the situation from their perspective.

But, until such an unlikely event, here are several observations that, at least to me, seem to suggest that perhaps I'm not so far off-base.

If the major US airlines can't afford to pay commissions to travel agencies in the US, why are they still paying much higher commissions to travel agencies overseas than they formerly were paying to US agencies (hint - overseas they are the 'small guys' and need the help of travel agencies to encroach on the foreign carrier's home territories)?
Why are almost all the small airlines still paying commission to US travel agencies? How can they afford this cost if the big airlines can't (hint - small airlines know the true value of travel agencies and are keen to see them remain in business)?
Why are almost all the overseas carriers still paying commission to US travel agencies? How can they afford this cost if the US airlines they compete with can't (hint - overseas airlines also need US travel agencies to get their tickets sold)?
If the major US airlines can't afford to pay something under 5% commission to travel agencies, why are they still offering companies direct discounts of up to as much as 30% (and rumored up as high as 50% in some cases) (hint - zeroing out travel agency commissions is nothing to do with the < 5% cost of those commissions)?
Why are the major US airlines refusing to comment on or explain the financial rationale behind their claim that they can't afford to pay a maximum of $20 per ticket to US travel agencies, while some industry commentators believe that the cost to the airlines to sell direct is at least as high (or higher) than their cost of selling via travel agencies (hint - this is nothing to do with costs, this is all to do with controlling the distribution channel)?

Isn't this Anti-Competitive? Shouldn't it be Illegal?

I'm not an attorney, and so I can't comment on this point. I do know that there have been repeated attempts to bring anti-competition lawsuits against the airlines, but every one of them has failed, so that suggests one of two things to me - either, everything the airlines do is entirely legal, or else the laws are not well written and need to be changed!

More important than what I think is what you think.

If you don't think this is fair - if you think that squeezing travel agencies out of business might harm airline competition overall, thereby reducing your choices and increase your travel costs and inconvenience, talk to your Congressman and Senators about this and demand that they do something.

We need to protect a viable independent distribution system for airline tickets. If this does not happen, we - the consumers - will all be the losers.

Tell David your opinion. Send him an Email - DR@DavidMRowell.com