Carson and Reno travel agencies instigate antitrust lawsuit against airlines
April 17, 2003
A lawsuit initiated by Carson City and Reno travel agencies claims major airlines are “price fixing” by conspiring to eliminate commissions paid to agencies.
The class-action suit was filed in federal court in San Francisco last week.
Owners of Bonanza World Travel and Uniglobe Happy Travel in Carson, along with owners of three Reno agencies, got together a year ago after airlines stopped paying agents a commission on ticket sales. Southwest Airlines is not being sued because it continues to pay for ticket sales.
The agents first met with Sen. Harry Reid, R-Nev. After discussing the allegations, he connected them with antitrust lawyer Joseph Alioto of San Francisco.
“It’s price fixing,” Alioto said. “It’s also a boycott.”
He said it may take more than a year for a trial date. The trial has been moved from San Francisco to Oakland.
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“We’re prepared to go all the way to trial and to win,” Alioto said.
Troubles with ticket revenues began years ago with airline Internet sales then worsened with terrorist events, especially Sept. 11, 2001, according to Bonanza World Travel owner Sylvia Sparks and Uniglobe owner Jan-Marie Brown.
In September 1997, airlines began reducing commissions paid to agents from 10 percent to 8 percent of the ticket price. Two years later, airlines again reduced commissions to 5 percent. Ticket commissions were capped in August 2001 for all airlines at $20 for a round-trip ticket.
In March 2002, airlines eliminated commissions altogether across Canada, the United States, Puerto Rico and the U.S. Virgin Islands. They continue to pay agents in Europe, Alioto said.
The reductions in commissions has had its toll on Carson agents, forcing them to reduce employees and cut costs.
“We try to cut corners everywhere we can,” Brown said. “Our staff works twice as hard for less hours.”
To make matters worse, the agencies are contracted with airlines and required to sell a set number of tickets, in order to use their computer systems. Basically, they need to continue selling tickets, even though they are not paid to do so.
“We will always book airline service,” said Sparks. “It’s part of our service.”
Agencies have turned more to selling cruises, vacation and family packages, corporate business and land vacations, though air travel continues to be a substantial part of doing business, Sparks said.
Defendants in the suit include Delta Air Lines, American Airlines, Northwest Airlines, Continental Airlines, U.S. Airways, Alaska Air Group, America West Airlines, Hawaiian Airlines and several other domestic and international airlines.
The suit alleges that, beginning in September 1997, the airlines “combined and conspired” to reduce, cap, and eliminate commissions paid to travel agencies and agents, in order to eliminate competition among themselves for the sale of tickets.
Alioto said the suit seeks damages that may total $150 million to $200 million.