Airline vs Airline
Part 2 of a series about Travel Agents
The major airlines hate
'rogue airlines' even more than they hate travel agents!
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.
2 of a 5 part series - click for Parts
You might think that when the
major airlines zeroed the commission they pay to travel
agencies, they were simply trying to squeeze out travel
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
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 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
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!
After the new airline has been killed off, the established
airlines then 'punish' us, their customers, with a return back
to high fares and fewer flights.
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
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 in 2002 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
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 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
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
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.
Read more in the rest of this
Part 1 we discuss how travel agents can
help you better than supplier representatives can or will.
Part 3 we talk about the bad reputation
travel agents generally suffer from, and why some of it is fair,
but much of it is very unfair.
Part 4 we offer some solutions to
the problems the travel agency industry is currently facing.
Part 5 represents a
bringing together of both this article series and also the
series on how to choose a travel agent and agency, and talks
about ways in which you can now best use travel agency services.
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5 April 2002, last update
28 May 2011
You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.