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Airlines cut commissions
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September 23, 1997: 5:55 p.m. ET
American, Delta expect new rate structure will save millions annually
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NEW YORK (CNNfn) - Following the lead of United Airlines, Delta Air Lines and American Airlines are putting caps on travel agent commissions.
Delta officials said Tuesday that commissions on all tickets purchased in the United States for domestic travel will be 8 percent. The maximum commission will be $25 per one-way ticket and $50 for a round trip.
Delta estimates the move will save $90 million to $100 million annually. The carrier said it paid more than $1 billion in commissions to travel agents last year.
Tickets purchased in the U.S. or Canada to any international destination will earn an 8 percent base commission with no maximum.
American Airlines also said Tuesday it has also reduced commissions to 8 percent.
The wave of reductions started Sept. 19 when United Airlines announced it was capping commissions at 8 percent, a move it says will save it up to $100 million annually.
Travel agents say these savings will not be passed on to the consumer.
"Without the travel agent standing as a buffer between the consumer and, let's say, United Airlines, if you want to go to Denver and you call United, I can assume they want to make record profits. And God bless 'em. Let them make it. They're not going to put you on a Continental flight," said Jack Tillem, president of the American Society of Travel Agents.
Travel agents sell more than 80 percent of all airline tickets as consumers find them a very convenient, hassle-free way of making travel arrangements.
But now that the airlines will be paying less, travel agents warn they may have to begin charging consumers for their services.
--Cyrus Afzali
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