Last updated: 05:33 PM ET, Wed July 13 2016

The State Of The Agent-Airline Relationship

More than two decades after commission cuts and caps, airlines are reaching out to agents

Vacation Agent | Features & Advice | Rich Thomaselli

The State Of The Agent-Airline Relationship

Mohawk Airlines mailer from the 1960s. (photos courtesy

Twenty-one years. That’s how long it’s been since the airlines began capping and cutting commissions and the deep freeze between carriers and travel agencies took root.

But things also have a way of thawing over time, and the big question these days is this: Are airlines again reaching out to travel agents?

Anecdotal evidence suggests they certainly are, even by just the smallest bites. Even within the pages of this magazine there are increased ads from such carriers as Delta Air Lines and Korean Air, among others, which clearly cater to the main audience of this publication – agents and agencies.

“We are seeing that airlines are definitely reaching back to agencies that are more corporate-focused and selling higheryield tickets. The airlines have done enough analysis and realize that the travel management company (TMC) market in particular is one they need to focus on,” says Roger Block, president of Travel Leaders Franchise Group and a former chair of the board of directors of the American Society of Travel Agents. “The agencies with high-end leisure are selling high-yield tickets. So the airlines, for the small amount of override commissions they are paying, see it is a great return on investment for them to capture that market share as well. That is why they are offering incentives to agencies – they are getting a good return for their investments.”

 For Michael Holtz, owner and CEO of New York-based SmartFlyer, relationships with airlines never ended following commission cuts. “Travel agencies remain an important part of the distribution chain for airlines,” he says. “Some travel agencies have more connections and ‘leverage’ than others.”    

For its part, SmartFlyer is very involved in the air travel portion of the client experience. “Like anything else, some know more than others, so if you are working with a ‘plugged in’ agent, you will benefit from his or her added knowledge,” Holtz says.

Nonetheless, some airlines have continually tried to drive a wedge between themselves and agents. Last year, Lufthansa introduced a controversial new practice in which it tacked on an additional $16 surcharge to every ticket if it was purchased from a third-party seller – and not from Lufthansa’s website or one of its brick-and-mortar offices.

Yet, in an encouraging sign, even though competing airlines gave Lufthansa’s move a public vote of confidence as the next logical step to garner more of the public’s business, not a single one of them followed.

Moreover, surveys illustrate that millennials value the services of travel agents. And in the view of Block, other demographics are realizing the value of travel agents’ services as well. “The overall travel community is using traditional travel agencies more.

Yes, there are the travelers who see the planning stage as much of a pleasure as the actual trip – but there are a lot of people whose time is scarcer than money and they find they do get a better experience [using an agent] and they save money,” says Block. “So, it is not just millennials but everyone using traditional agencies more often.”

Does that necessarily mean that airlines will start paying commissions again?

"I don’t think so. Not up front. We are down to four major players in the United States. They will continue to be aggressive and they will target those agencies with higher-yield tickets,” Block says. “So the airlines will be selective in whom they offer override programs to. It just won’t be to everybody."


To understand where we are, we need to understand where we’ve been. The airlines and travel agencies were brothers in arms almost since the brothers Wright sent their first airplane aloft on the beaches of Kitty Hawk. It was a symbiotic relationship, to be sure.

The airlines needed representatives in the field to entice customers to journey to exotic lands – even if, at first, an exotic trip meant a flight from New York to Philadelphia. Agents, in turn, thrived on the commissions that airlines paid on each ticket.

It was clearly a love-love relationship for decades.

Then came 1995 and a veritable sea-change in the industry. That was the year that airlines instituted commission caps, and while there were still commissions to be had, they weren’t as big as agents had traditionally been used to over the previous 20, 30, 40 years.

If that wasn’t bad enough, the turn of the century brought a further reduction in commissions. It wasn’t a happy time in the industry.

In 2002, commissions were cut almost universally. And then came the Internet. Suddenly, airlines were hitching themselves to the Web to enable consumers to purchase airline tickets online.

Airlines and agents still had a relationship, albeit at arm’s length, as agencies still had to work with airlines via group travel and packages.


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Vacation Agent Magazine

A version of this article appears in print in the July 2016 issue of Vacation Agent Magazine.