Travel agents hit turbulence

Posted: Thursday, April 24, 2003

Penny's Travel Agency in Kenai closed its doors at 6 p.m. on April 11. Owner Teena Dyer told a client several days before that she would continue business through that weekend.

"I'll be writing reservations until Sunday," she said over the phone. "That's when this cycle is up."

Dyer said hers is a profession in jeopardy, as changes in the national economy and the travel industry are creating difficulty for travel agents.

And she said her 31-year-old company won't be the last to go.

"It may be at a time that travel agents are getting outdated," Dyer said. "Like having a store that sells (music) cassette tapes when now you have CDs."

Dottie Fischer owns Alaska's Best Travel Agency at the Kenai Municipal Airport. She said the absence of airline commissions to travel agents is putting a strain on small agencies, forcing them to charge service fees that some customers may not be willing to pay.

"It used to be that the airlines paid me for selling their tickets," Fischer said. "Now, my job is to find the client the best price and offer the best service possible for the customer's needs. That's the only way I'm worth my $25."

Dyer said a combination of Internet devotees, high airline prices and, in particular, the gradual fazing out of airline commissioning are responsible for driving Penny's out of business.

"In the old days, airlines paid us 10 percent," Dyer said of the commission structure.

In 1995, major airlines capped commissions to $50 for one-way flights and $100 for round-trip airfare. The caps were subsequently reduced before being eliminated altogether in March 2002.

Before the change, many travel agencies counted airline booking commissions as a significant source of their business. A report by national automobile club AAA showed that 70 percent of the all airline tickets were sold by travel agencies before 2002.

In a June 2002 testimony before the National Committee to Ensure Consumer Information and Choice in the Airline Industry, Mark Brown, AAA's executive vice president of association and club services, said the commission cut had drastic impacts on small travel agencies.

"Large, diversified organizations like AAA will survive, and we will adapt to a changing travel environment," he said. "Many smaller travel agencies will not. That's not good for the economy, and it's not good for consumers.

"This action is estimated to put an estimated 5,000 agencies (20 percent) out of the travel business. ... Agencies selling less than $1 million in air were more affected 40 percent of AAA Clubs that had airline sales of less than $1 million lost money in 2001."

Dyer said the Internet also posed a threat and suggested that because one particular site Obitz.com, formed by American, Continental, Northwest, Delta and United airlines was owned by a collection of major airlines, it was an effort on the part of the airlines to do away with travel agencies.

"They regulate us, then they undercut us," she said.

Dyer said she saw her clientele dwindle down to "a lot of seniors and people who don't want to put their credit cards on the Internet," and expressed concerns for people who had special needs that airline Web sites and call-in operators don't address. She said those things will be missed if other agencies go away.

"The agencies give people lots of little tricks," she said. "Like bereavement fares and companion fares. Those things you can't get off the Internet. And what about people who don't have credit cards? What are they supposed to do?"

Dyer and her husband, Michael, bought the company from Michael's mother, Penny Dyer, in 1986. The company had been in business since 1972, and Teena had worked there since 1978 and was managing the office and two employees at the time it closed. She said she was going to miss her job.

"I have had just one sick day in 17 years," she said as reminisced over her career and the clients she said made working at Penny's special. "They're not just clients. They're friends. I've been invited to weddings and retirement parties and funerals. That's going to be the hardest part about leaving."

What will Dyer do next?

"I'm looking for a job," she said. "I'm 47. I'm too young to retire and I can't afford to."

One of Dyer's employees, Michelle Koenig worked at Penny's for seven years. She started working for Fischer's travel agency Monday.

As far as the fate of other small agencies, Fischer said it is important for them to take advantage of new technology where they can. She said she is not concerned about the business she's owned for the past seven years, however.

"I think that I'm in a healthy situation because we always do things on a cutting edge," she said.

She said she works with Internet prices where she can and tries to get bargains through rates she receives through her reservations system.

She said not all airlines block out commissions, and carriers such as the Australian Quantas Airways and Dallas-based Southwest Airlines still pay agents commissions for ticket sales.

And she also collects commissions for booking vacation packages.

"I'm never going to be a rich woman," Fischer said. "As long as I'm OK and I'm meeting my clients' needs, I'll be just fine."



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