Hawaiian, Aloha
keep agent fees,
at least for now

Pacific Wings, hoping
to pick up business, said it is
offering a 15% commission

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Star-Bulletin staff and wire

Sensing an opportunity to increase business, many smaller airlines have not joined the country's major carriers in eliminating per-ticket commissions to travel agents.

While it remains unclear how long they can afford to hold out, executives at lower-cost and mainly regional airlines are hoping to boost ticket sales through the small travel agencies that depend heavily on the commissions.

Locally, both Hawaiian Airlines and Aloha Airlines say they have no immediate plans to eliminate travel agent commissions.

But both say they are studying the issue. Currently, both airlines pay a 5 percent commission with no cap.

But Maui-based commuter airline Pacific Wings said it is offering a 15 percent commission to travel agents who use its reservation system to make their bookings.

Even without using the airline's reservation system, the company said it offers a 10 percent standard commission on any type of travel agent booking.

Company President Greg Kahlstorf said he believes the increased commission should create a good incentive for travel agents now being hard hit by the elimination of commissions by a number of the major airlines.

It's also likely to boost the 4-year-old company's visibility and help capture more inter-island market share, he said.

Eliminating commissions is likely to create backlash within the travel agent community already unhappy about with the airlines about commission cuts, Kahlstorf said.

Danny Casey, president of the Hawaii chapter of the American Society of Travel Agents, said he is hopeful that both Hawaiian and Aloha will continue to maintain their commission structure.

The airlines could capitalize on the cuts and eventually gain a greater market share of passengers from the mainland, he said.

"Hawaii has always been a destination that has been travel agent-friendly," he said. "If Hawaiian and Aloha kept commissions, they could look more attractive to mainland agents who may have used the larger carriers to come here."

Elsewhere, mainland carrier National Airlines pays a 10 percent commission for each ticket sold.

"The industry has historically referred to travel agencies as partners, even as they've been bludgeoning them with commission cuts. We like to think we walk the talk," said Michael Conway, chairman and chief executive of National Airlines.

If the plan works, carriers such as Air Tran Airways, Frontier Airlines and National will steal market share from major carriers serving Atlanta, Denver and Las Vegas -- their respective hubs.

All else being equal, "I will push Air Tran more than I push Delta, but I've done that for years because they are an agent-friendly airline," said Dennis Fenton, owner of Your Travel Connection in Albany, Ga.

Even so, Fenton said 70 percent of the tickets he sells are for Atlanta-based Delta Air Lines, which competes with Air Tran in dozens of cities east of the Mississippi River, but offers greater frequencies to more destinations.

Cutting costs every way they can, the country's biggest airlines last week ended the decades-old tradition of paying per-ticket commissions. Analysts say it could save the industry as much as $1 billion a year.

The move could force many smaller travel companies to merge or go out of business. It will do little harm to larger agencies, which get other compensation from the airlines for meeting certain sales targets.

These incentive-based payments, known as "override commissions," are frowned upon by consumer advocates, who say travel agents should be required to disclose any special agreements they have with a particular airline.

"A lot of small carriers can't afford to play the override commission game," said Lowell Miller, a marketing executive at Denver-based Frontier. They also have smaller advertising budgets than the leading airlines, he said.