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Caps on Commissions

March 19, 1995

Your Feb. 19 Travel Insider column was right on target ("Fare Warning: Infrequent Fliers May Be Hit With Fees"). The information should greatly assist your readers in better understanding what has recently occurred with the airlines' move to cap commissions. It is always refreshing to read an article when the writer obviously has knowledge of the topic.

DONALD E. RUSH

Owner, Peters Travel Service

Simi Valley

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This is how a travel agency works: The client calls an agent for round-trip tickets to Chicago on Airline "D." On the computer, the agent calls up all airlines for the day and time requested. She sees a flight on "D" for $450. She also sees one on Airline "A" for $400 and another flight--departing two hours later--on Airline "M" for $320. If the client can take the later flight, the agent has just saved the client $130.

This is a hypothetical case, but it is the rule, not the exception, that the agent will find a less expensive flight. This service was free to the public until Feb. 9, 1995. The agency received a commission on the ticket from the airline and the price of this ticket was the same, whether the client bought it from the airline or the agency. The travel agency is a dispensing entity for airlines, tour companies, hotels, rental car agencies and cruise companies.

In February, the major airlines put a cap on commissions. They have told travel agencies to charge the client a service fee. Due to their actions we may need to charge this service fee or cease to function.

The travel agency will continue to serve the public as a convenient, stress-reducing and money-saving entity.

CAROL MARINOFF

LTS Travel Service

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There is an error in the numbers. Our commission on a $1,200 ticket used to be $109.09, not $120, because all domestic airline tickets have included in the fare a 10% U.S. government tax. The tax is not commissionable to us. There are also airport taxes of $3 at many airports, which can add another $12 to the price. Our effective commission is about 9% of the total fare, or 10% of the base fare, before taxes are added. Now we are capped at $50.

The 10% U.S. government tax is supposed to be spent for airport improvements, but the government is not giving it to the airports. That is why the airports are adding their own $3 tax for each passenger. Maybe someone should hold the government accountable for this.

RON RARIDON, Owner

Travel Network

Laguna Hills

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