Sales Commissions

When the major airlines last year capped the commissions they pay to travel agents, Joe McClure knew his agency was in for a spell of turbulence. The president of Montrose Travel near Glendale calculated that his agency stood to lose $20,000 a month in revenue unless he moved quickly to fill the gap. So McClure beefed up his agents' sales incentives and retrained employees to focus their energy on selling and service, rather than administrative chores.

Jenny Johz was in the middle of an East Coast vacation when she heard the latest news to hit the travel industry. "Booking a flight with an agent may cost me more," the Los Angeles resident said during a holiday visit to New York. "Don't these things already cost enough?" Like thousands of other air travelers, Johz relies on the convenience of travel agencies to purchase airplane tickets.

Jenny Johz was in the middle of an East Coast vacation when she heard the latest news to hit the travel industry. "Booking a flight with an agent may cost me more," the Los Angeles resident said during a holiday visit to New York. "Don't these things already cost enough?" Like thousands of other air travelers, Johz relies on the convenience of travel agencies to purchase airplane tickets.

A San Clemente consultant believes that technology could help big companies cope with the fallout from major airlines' decision to cap the sales commissions they pay to travel agents. "Expect companies and their travel agency vendors to be taking a serious look at automated reservation processing solutions to reduce costs and increase agency productivity," said Tom Blakeley, a consultant in corporate travel automation.

The world's largest organization of travel agents accused the nation's major airlines Tuesday of engaging in price fixing when they reduced agents' commissions for domestic airline tickets. The American Society of Travel Agents Inc. said it plans to file a class-action antitrust lawsuit against the major U.S. airlines, seeking a permanent injunction against capping commissions and asking for damages equal to triple any losses the agents incur from commission reductions.

The assault on the nation's travel agencies intensified Friday when two more big airlines, American and Northwest, joined Delta in imposing caps on the commissions paid to agents for domestic tickets. The agencies were outraged, and some said the limited payments will push many of the nation's 45,000 agencies out of business. "I don't think I've been more scared in my (24) years in the travel business," said Daniel J. Marinoff, owner of LTS Travel Service in Culver City.

When leading U.S. airlines moved last week to cap travel agents' commissions on airplane tickets, Jackie Abkion was furious. "The airlines are trying to get rid of us," said the Glendale travel agent. And the commission cap was not her only complaint: Hotels are cutting their payments to agents. Big corporate customers are demanding discounts. And even large retailers such as Costco are writing discount plane tickets for customers. "This is what the travel industry has come to," Abkion moaned.

A committee of financial luminaries said in a report issued Monday that the way most stockbrokers are paid puts them in conflict with their customers' best interests. But they called the system "too deeply rooted" to do away with soon. Instead, the five-member committee on compensation practices, appointed by Securities and Exchange Commission Chairman Arthur Levitt Jr., proposed less radical steps aimed at taking away brokers' financial incentives for exposing customers to unnecessary risks.

Key recommendations of the high-level committee appointed by Securities and Exchange Commission Chairman Arthur Levitt Jr. to change the way securities brokers are compensated: * Eliminate higher commissions for in-house "proprietary" products. These include a brokerage firm's own family of mutual funds. At some firms, brokers get bigger commissions for selling shares in these funds, even though the funds' performance may be lackluster.