The Civil Aeronautics Board yesterday tentatively proposed eliminating fixed commission rates paid to travel agents for selling domestic airline tickets.
The move, coupled with a broader investigation into airline ticket marketing, could result in a more competitive marketplace for airline tickets where the price of a ticket might vary depending on how it is sold.
Currently all travelers find the same array of prices for a ticket between points A and B, no matter whether the ticket is purchased at an airline ticket office, at the airport, by mail or through a travel agent. Should the board decide to go ahead with a thorough deregulation of airline ticket marketing, prices could vary with the purchase location, the services rendered or other factors.
Under current practice, the Air Traffic Conference of America, a group of 17 airlines, establishes maximum uniform levels of commissions for agents; all travel agents authorized to sell the airlines' tickets now receive commissions of 7 percent on normal first class or coach fares and 10 percent on designated promotional fares. The ATC agreements must be submitted to the CAB for approval.
In its order yesterday, the CAB said it tentatively had determined that the current arrangement, under which commission rates don't vary between the airlines or between the agents, may reduce substantially or eliminate price competition for the agents' services.
Tickets bought directly from an airline under an open situation may or may not be cheaper, one source said. Although many persons assume that the current system causes the ticket buyer who dealt with an airline to subsidize the ticket buyer who dealt with a travel agency, it may cost more for an airline to maintain a ticket office in an expensive location than to offer tickets to a large agency in bulk at a discount.
The board raised the possibility of a two-tier pricing system where an airline might set one price for agents and another for the public. The agents would be able to resell the ticket at whatever price they picked.
Another possibility is that an airline might find an inexpensive way to sell tickets directly to the public -- by mail through a toll-free 800 number, for instance, to cut the price of a ticket sold directly to consumers.
The CAB previously ended its approval of fixed commission rates for international routes and said yesterday there appears to be no reason why the same findings shouldn't be applied to the domestic routes.
In its broader investigation of airline ticket marketing, the board will look into the relationships between airlines, travel agents and the public.