Delta cuts fees to travel agents
Bloomberg News Service
ATLANTA Delta Air Lines Inc., the third-largest U.S. carrier, said it will eliminate routine commissions paid to travel agents for tickets sold in the United States and Canada, to reduce costs.
The airline is starting the policy after financial losses triggered by the recession and the Sept. 11 attacks and because of increasing sales through the Internet, a cheaper way to sell tickets.
The decision affects agents in the United States, Canada, Puerto Rico and the Virgin Islands. Delta said it will continue to pay incentive commissions negotiated with select agents. Other airlines may follow, analysts said.
"This is one more tear in the evisceration of travel agents and I don't know how many more tears agencies can take," said Ken Smith, of the Boston-based travel agent Travel Depot Inc. "They're ruining a distribution model."
The nine largest U.S. airlines paid about $3.4 billion in commissions last year, mostly for U.S. travel, Deutsche Banc Alex. Brown analyst Susan Donofrio said. Delta, which had a loss of $1.22 billion last year, paid $540 million in commissions.
The carriers sell as much as 80 percent of tickets through travel agents, including some online, agents estimate. But the airlines are increasingly selling tickets through their own Web sites.