Small-business survival gets much more difficult when major revenue sources are slashed. That only makes sense. So while the American Society of Travel Agents’ call to close member agencies Thursday for two hours (8 a.m. to 10 a.m. in Hawai’i)
Small-business survival gets much more difficult when major revenue sources are slashed. That only makes sense.
So while the American Society of Travel Agents’ call to close member agencies Thursday for two hours (8 a.m. to 10 a.m. in Hawai’i) was announced as a time for calling elected officials in Washington, D.C. to support passage of the Airline Passenger Bill of Rights Act of 1999, a more pressing issue for agents on Kaua’i and in other locales was airlines’ continued slashing of commissions that are a major source of agency revenue.
“Commission cuts could put agents out of business,” said Lynne Sasaki Matsumura, president of the family corporation operating Universal Tour and Travel Service Inc. in Lihu’e.
Travel agents used to make a 10 percent commission on each airline ticket sold, but most airlines slashed that to 5 percent, she said.
And while $50 used to be the commission cap on each round-trip ticket sold, many airlines (Hawaiian and Aloha excluded) have lowered that cap to $20.
So, the $150 commission a travel agent made for selling a $1,500 round-trip ticket from Lihu’e to New York City now is down to $20.
American Airlines was the first to announce the latest cuts, on August 17, effective August 18. United Airlines, which is the only non-Hawai’i-based carrier flying into Lihu’e, followed suit, with an announcement August 22 effective August 23.
Both companies in press releases announcing the new caps said they “will have no further comment on this matter.”
A United spokeswoman said she could not comment on the matter, and American sources did not return e-mail requests for answers to many questions, like are they trying to put travel agents out of business (as ASTA’s Hawai’i chapter claims in a press release), and why the decision was made to lower agent commission caps.
Universal and only a few other of the 21 businesses listed under the travel agencies and bureaus heading in the Kaua’i Yellow Pages are American Society of Travel Agents (ASTA) members.
Airlines for years have been seeking to reduce commissions and other payments to travel agents by encouraging passengers to book directly with the carriers, using toll-free numbers, Internet-only fares and myriad other means.
But Matsumura and other agents, as well as airlines and others in the travel industry, know there is a continued niche in the travel marketplace for agents. Agents still generate a healthy percentage of airline business.
“We know there is a need for travel agents, so what can we do to stay in business and still provide the level of service that people expect of us, taking into account that we’d be getting that much less revenue on what we do?” Matsumura asked.
While travel agents on Kaua’i serve mostly local markets for interisland travel and other needs, on a national basis agents are extremely important in sending people to Kaua’i and Hawai’i. A majority of visitors to the islands still depend on agents to book at least portions of their itineraries. That’s why ASTA regional, national and international meetings, as well as other travel-agent gatherings, are always attendance priorities for Kaua’i Visitors Bureau and Hawai’i Visitors and Convention Bureau officials.
But the latest round of commission cuts, according to Matsumura and other agents, could have particularly profound impacts on them and agencies.
“It’s been going on for several years now, and this cut is quite devastating,” Matsumura said of the latest commission cap, which equates to a 60 percent decrease in gross revenues. “So that’s got to have an effect on everyone.”
Irvin Green Jr., owner of A Plus Travel in Kapa’a and Koloa, said travel agents, by diligent searching, nearly always get better fares for customers than those offered by the airlines themselves through toll-free numbers or Web sites.
“Unless you’re able to fly on July 4 at 2:15 in the morning and stay over three nights, including a Sunday, you don’t get any discounted fares by booking directly with the airlines. And anybody who believes that is industrial-strength dumb,” said Green.
“But because the buying public believes everything that they read, they’re out there spending more money by booking directly with the airlines than if they’d gone through a travel agent – those that will take the time to search,” he said.
The price of a ticket doesn’t go down, but more money goes to the airline and none to the travel agent when passengers book directly with carriers, Green continued.
Green, whose agency is not an ASTA member, said airlines have been trying to put agents out of business for at least a decade, so the carriers can charge any prices they want and passengers won’t have alternatives but to book directly with the carriers.
Agents routinely search for the lowest possible fares for passengers, sometimes offering alternative routings and different carriers.
Hawaiian and Aloha have been much more agent-friendly than the major mainland airlines, according to Green and Matsumura. They held to the 10 percent commission level long after the other carriers dropped theirs to 5 percent.
Matsumura said Thursday’s closing of her agency was also a time for strategic planning for survival in the wake of the latest airline commission cut. “What can we do to cope with it, actually,” she said.
Some ASTA members on the island didn’t close their doors during the national event.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
