Small Agencies Will Feel the Pain of Zero

Meetings & Conventions: Newsline newsline.gif (8042 bytes) TRAVEL MANAGERS ASSESS THE EFFECTS OF AIRLINE COMMISSION CUTS
Small Agencies Will Feel the Pain of Zero
Going up: Commission cuts might hike agency booking fees. The decision by six major airlines to drop base commissions paid to travel agents hardly evoked a murmur of surprise when announced this past March, but the ramifications for smaller travel agencies and small corporate travel accounts are considerable.

“Large companies will hardly see the difference, because they are primarily using net fare arrangements,” volume-based discounts that are noncommissionable, said Charles Roumas, Mt. Laurel, N.J.-based vice president, East region, for American Express One, which handles small and midsize corporate accounts.

“The airlines certainly gave us enough warning,” said Suzanne Fletcher, director of travel and meetings management for Weyerhaeuser, an international forest products company based in Federal Way, Wash. “This should not have come as a surprise to anyone.”

However, smaller firms, which do not have the air travel volume to command net fare deals, are likely to see a modest markup in costs. Amex’s Roumas predicted these companies will see a 3 to 5 percent increase in the cost of travel services, primarily in the form of transaction fees.

Also, firms that had fee-based agency agreements but were being rebated the commissions for their commissionable travel have seen most of that revenue stream disappear.

The zero commission decision is likely to spur Internet usage among smaller companies that don’t want to pay agency fees, said Paul Keung, New York City-based travel industry analyst for CIBC, a Toronto-based financial services firm. Another result, he said, might be that agents have a greater “screen bias,” booking first through carriers that continue to offer incentive programs such as commissions.

Several smaller carriers, including National Airlines, Air Tran Airways and Frontier Airlines, have maintained commission rates as high as 10 percent in an attempt to expand market share in a down economy.

Many agree the move is good for corporate travel. “It has altered the landscape between the airlines, agencies and corporations,” said Larry Austin, chairman and CEO of Melville, N.Y.-based Austin Travel. “Now, clearly, we work for the customers.”

• LOREN G. EDELSTEIN AND BRIAN ORSAK

What Association Executives Earn The gender gap in earnings grows in relation to size of organization, according to a 2001 compensation survey. Male CEOs Female CEOs Trade association $136,775 $92,125 Individual membership association $139,241 $85,204 Total staff size: 2 or fewer $75,000 $60,000 3 to 5 $95,640 $77,000 6 to 10 $116,550 $108,000 11 to 20 $138,200 $126,000 21 to 50 $201,923 $159,280 51 to 100 $237,900 $145,518 More than 100 $287,600 $249,233 Total annual budget: $300,000 or less $67,600 $54,789 $300,001 to $500,000 $75,600 $68,579 $500,001 to $750,000 $90,000 $72,800 $750,001 to $1 million $102,000 $87,525 $1,000,001 to $2.5 million $118,800 $112,425 $2,500,001 to $5 million $170,000 $137,100 $5,000,001 to $10 million $227,750 $160,585 $10,000,001 to $15 million $225,994 $171,750 More than $15 million $285,000 $256,269 Source: American Society of Association Executives