Calling a move by Delta Air Lines to cease the payment of base commissions to travel agents “anti-consumer,” the American Society of Travel Agents (ASTA) today said the action is an attempt to “balkanize” the industry, seriously disadvantage secondary and smaller carriers in Delta strongholds and shift all airline distribution costs to the consumer. The action also raises fundamental questions about whether travel retailers are still “agents” of Delta and about Delta`s continuing right to participate in certain joint industry activities, such as the Airlines Reporting Corp. (ARC) accreditation and agency management system.
“Delta is completely shifting all distribution costs onto the consumer. Consumers in the South are just beginning to understand what a true monopoly is. Clearly, Delta is using its monopoly power to unfair advantage,” said Richard M. Copland, CTC, ASTA president and CEO.
In light of the major change in the competitive structure of the airline industry, ASTA called for an immediate halt to the sale of travel agency transaction data to the airlines by the Global Distribution Systems (GDS). ASTA is asking for emergency action from the Department of Transportation to stop the sale of individual agency sales information on GDS computer tapes to the airlines and an immediate ban on enforcement of productivity clauses that penalize agents for booking outside the GDS system.
ASTA has maintained that airlines should not have the right to purchase the sales data of individual travel agencies because such information is used against agents for competitive purposes. The Delta action increases that risk exponentially. The productivity clauses deter agents from selling fares found on the Internet that are not available through GDSs.
“Delta Air Lines is a major shareholder in Worldspan. Its action today interferes with the ability of Worldspan-contracted travel agencies to fulfill their productivity contract obligations. Therefore, independent of the general invalidation of productivity clauses that ASTA seeks from the Department of Transportation, ASTA will also ask that agents with Worldspan contracts be relieved from those obligations if they wish. In light of the new relationship, travel agents may prefer to book Delta tickets online,” said Copland. “Since Delta is a primary shareholder in Worldspan and has changed the rules of the game so drastically, Worldspan should not be allowed to force agents to meet those booking thresholds.
“This action raises a question about whether a travel agency is still an `agent` of Delta when Delta no longer has a commission agreement with that agency,” said Copland. “This may change the entire structure of the agency`s business relationship with Delta, including whether agencies must abide by the same rules and policies that they do with other carriers. Under the commission relationship, all agents were agents for everybody. Now, that link appears to be broken. All travel agents may no longer be agents of Delta.
“It appears that Delta is seeking to create a set of dealerships with preferential relationships with certain travel agencies to the detriment of other airlines. The question for the industry is this: Do other airlines wish to `balkanize` the industry in this way?” said Copland. “Agencies in Delta strongholds such as Atlanta, Salt Lake City and New York, will be forced to work with Delta to the exclusion of other carriers or run the risk of being put out of business by Delta. This attempt to weaken the neutrality of travel agents will also hinder new airline entrants into any marketplace. Delta`s `pay-for-performance` system may make seek to prevent many agents from selling airlines other than Delta.
“Travel agents will survive this. The vast majority of travel agents charge fees. Consumers love what travel agents do for them and will continue to use agents,” said Copland. “We are reminding our members that travel agents may choose to charge higher fees for Delta or any other carrier that does not pay commissions,” said Copland.
About ASTA:The mission of the American Society of Travel Agents and its affiliate organizations is to enhance the professionalism and profitability of members worldwide through effective representation in industry and government affairs, education and training, and by identifying and meeting the needs of the traveling public. The Society is the world`s largest and most influential travel trade association with over 24,000 members in 140 countries.