Following the nation's major carriers, Hawaiian Airlines announced yesterday it will no longer pay commissions to travel agents, a move that will contribute to higher ticket prices for consumers, some local agents said. Hawaiian Air eliminates
travel agent commissionsLocal agents, who say they're being
forced to pass on the fees to customers,
fear Aloha may be nextBy Tim Ruel
truel@starbulletin.com
The Honolulu-based carrier said that to cut costs, it will stop paying commissions to agents in the United States, Puerto Rico, the U.S. Virgin Islands and Canada, starting Monday. Hawaiian spent $20.8 million on commissions last year, spokesman Keoni Wagner said.
With the rest of the industry cutting commissions, Hawaiian must remain cost-competitive, said John W. Adams, the firm's chairman and chief executive. Adams, who led the investor group that bought control of Hawaiian in 1996, recently assumed the roles of CEO and president from Paul J. Casey, who announced his resignation from Hawaiian last month.
After years of commission cutbacks, Delta Air Lines first announced in mid-March that it would no longer pay agent commissions. As usual, other major carriers including Continental, American, Northwest, United, US Airways, America West and Air Canada followed suit.
Hawaiian's decision leaves Aloha Airlines among a handful of regional carriers that still pay commissions. Aloha pays a 5 percent commission with no maximum cap, the same policy that Hawaiian had, and Aloha has no immediate plan to reduce its commissions, spokesman Stu Glauberman said. "We are studying changes that other airlines have made," he said.
One travel agent said she thinks it's only a matter of time before Aloha joins the others.
"I'm sure Aloha will follow next," said Linda Espirito, an agent with International Travel Service of Honolulu. Like many travel agents in Hawaii, Espirito learned of the news late yesterday afternoon. She's not surprised Hawaiian ended commis- sions. "We're over the shock of it all."
To make up for the lost revenue, travel agents have added ticket fees for customers. "They're making us the bad guy," said Rachel Shimamoto, vice president of Travel Ways and past president of the American Society of Travel Agents chapter in Hawaii.
Travel Ways now typically charges $40 transaction fees for mainland trips, and $20 fees for cancellations.
"It's the only way we're going to survive," said International Travel's Espirito.
Most of her customers understand the fees, Shimamoto said, though about 1 percent look elsewhere, such as the Internet, for cheaper flights.
Espirito said many customers will probably continue to do business with agents to get the extra service, in the event that flights change schedules or get canceled.
Hawaiian spokesman Wagner said it's not clear that ending commissions will lead to higher costs for consumers. "It's not so simple," he said, declining to be more specific.
Danny Casey, current Hawaii president of ASTA, criticized Hawaiian's move as being short-sighted, and said he had been hoping the airline would wait to measure the profitability of its new routes before cutting commissions. A week ago, Hawaiian added a daily flight between Maui and San Francisco, and resumed a daily Los Angeles-Maui service that it cut after Sept. 11. Earlier this month, Hawaiian began daily nonstop service between Oahu and two other California cities, Sacramento and Ontario.
Wagner noted that Hawaiian has typically been among the last of the carriers to cut commissions. The firm has looked to see if it could increase its share of sales by not cutting pay to agents, and didn't see a significant response from agents, Wagner said.
To survive, travel agencies are partnering with each other, Shimamoto said. For example, Travel Ways has a contract with United for flights to Las Vegas, and for a fee, another agency could sell the fare. "Resiliency, I guess, is what we have to look for," Shimamoto said.