Perhaps one of the most noteworthy changes for travel agents has been the significantreduction in commission earned from selling flights. Since 1995, major airlines, starting with those in the USA (American, Continental, Delta, Northwest, Trans World, Unitedand US Air) jointly agreed to place a cap on commissions, to ensure that the high-volumelow-price tickets cost the airlines little in commission, while commission on the high-pricetickets were restricted by the cap, and thus limited the costs to the airline. In 1999 most USairlines also reduced the percentage of commission paid (from 8% to 5%), and Europeancarriers followed suit, with commissions as low as 4%. In 2002 Scandinavian Airlinesannounced that it was to scrap commission payments to agents in Sweden, Norway andDenmark (though at that time not to agents in other countries) (Bray, 2002) while Finnairannounced that it was to move to zero commission in September 2003 (Finnairgroup,2003). Moving forward this approach has been taken by smaller airlines as well as thelarge carriers, and British Airways now pays a fixed commission rate per seat rather thanoffering a percentage of the ticket price (though business class seats earn a higher fee thaneconomy seats). This has led to a serious reduction in income for travel agents and as a result many travel agents are now seeking to increase revenue both by focusing on areaswhere higher commission levels are offered (such as for accommodation and car hire) andby charging fees for the services they provide. In the USA Levere (2000) estimated that at least three-quarters of agencies charged service fees while Beattie (2004) comments that
almost all New Zealand travel agencies charge fees (although interestingly most Australian
leisure travel companies do not).
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