Trashing travel agents

Travel agents sure have a good scam going. They tell you that they can always get you the best fare available, and that they charge you nothing or, more often these days, only a nominal service fee.

What a bargain. But do the math: at $10 a pop, how many reservations would it take to turn a profit? Someone is subsidizing this service, and knowing who’s paying your agent’s bills can save you money and hassles.

Agents make most of their money from commissions paid by airlines, car rental companies and hotels, not from the booking fees you cough up.

Airlines, for example, are plunking down a generous 15 percent commission on the back end. (I know-carriers recently reduced these kickbacks, but they’ve made up for it with incentives called overrides, which dole out a more generous commission if agents book a certain number of tickets.)

Run the numbers. On a $500 ticket, you’re paying the agent $10. The airline is paying the agent $75. With that kind of income model, where would your loyalties be?

Travel agents, notably the ones that handle leisure trips, are less than upfront about their allegiances. They describe airlines as their adversaries, railing on them for cutting commissions and trying to bypass agencies via the Internet. But all the while they’re actually becoming more and more dependent on individual carriers as airline competition wanes.

“Airlines have engaged in a concerted effort to reduce or eliminate their distribution cost,” complains Paul Metselaar, chairman of The World Travel Specialists Group Inc., a New York business travel agency. “Agency commissions have been reduced by 40 percent in the last few years, the theory being that travelers will use the Internet or call the airline directly instead of using an agent.”

Maybe it’s asking too much for agents to fess up about who butters their bread, but could they at least admit that being compensated by the suppliers biases them? Not a chance.

“As a travel agent, your loyalty is to your customer,” insists James Shillinglaw, editor of Travel Agent magazine, a New York trade publication for agents. “Because if you don’t do your job right, they won’t come back.”

I respect Shillinglaw’s opinions, but I think customers will return one way or the other because they don’t always know they’re getting slanted advice from their agent.

Just as financial advisors may soon be required to disclose how much commission they get from mutual funds, I think agents should do (or be forced to do) the same. This full disclosure would strike a blow for travelers, especially now that carriers are becoming cartels. Agents could break down their cut right on the itinerary-if they dared.

Here’s an example of how agents are susceptible to all sorts of bias. Last summer, I had to fly from Orlando to Baltimore. My agent booked me on an overpriced Delta flight that made one stop in Cleveland. But on my way to the gate on departure day, I noticed a Southwest flight boarding across the hall. Turns out that at about three-quarters the rate I’d paid, I could have flown to Baltimore-directly.

Needless to say, this crabby traveler was steamed. Why hadn’t my agent seen the fare? Because her reservations system didn’t even show the Southwest flight and instead steered her to the longer, more expensive Delta trip.

Cool off, she told me in a rare moment of candor. If she’d really wanted to pull a fast one, she could have booked me on her agency’s “preferred airline” that her supervisors constantly pressure her to sell. That would have diverted my little jaunt up the East Coast about 1000 miles inland to Minneapolis/St. Paul.

Travel agents aren’t all backstabbing villains, to be sure. A preferred supplier agreement sometimes lowers fares, and those savings are passed along to you. Plus, the middlemen can offer advice about traveling that you wouldn’t find in any book.

All of which doesn’t change the fact that the current distribution system-particularly for airline tickets-is fatally flawed. Agents are wooed with irresistible incentives, including higher commissions, free trips (also called “familiarization trips”), and lavish cocktail receptions. Our pitiful $10 service fee is just a token of our gullibility. It’s pocket change that pays for the paper clips.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

1 comment