Delta began a domino effect when it cut travel agency commissions for airline tickets sold in the United States, Canada, Puerto Rico, and the U.S. Virgin Islands in March, with most major airlines falling into line within days. By the end of March, American, Continental, Northwest, United, US Airways, America West, and Air Canada had matched Delta’s move. While airlines no longer are commenting on the issue, at the time Delta CEO Leo Mullin told USA Today they did it for a very simple reason: "There’s too much capacity and not enough passengers."
"Everyone knew this was coming—we just didn’t know it was coming quite this soon," says Shawn Pirrera, director of client services with Atlanta-based Travel Technologies, a full-service housing, registration, and travel firm forand trade shows.
The move, according to the Alexandria, Va.–based National Business Travel Association, changes the foundation of all travel purchasing by forcing organizations to revisit agency agreements and renegotiate with carriers. The possible upside? "Ideally, by eliminating the cost of paying agency commissions, airlines … will be able to offer reductions in business fares," says Marianne McInerney, NBTA’s executive director.
Initial reactions from meeting planners and travel agents weren’t quite so positive: "I’m sure prices are not going down in response to the commission savings," said one large-association planner shortly after the cuts were announced. "The fares will stay the same, but now people will have a hefty service charge on top of it," was the forecast of a travel agency group meeting specialist.
Oh ye of little faith! Perhaps the airlines aren’t as intractable as you think. In fact, according to George Coyle, product manager, group and meeting travel with Dallas-based American Airlines, "We have adjusted our pricing to be even more competitive. For example, our zone fares have been reduced, which certainly will be of benefit to association planners."