Thursday, April 10, 2003

Antitrust news

From the "as if the airlines don't have enough to deal with" department:

Dozens of travel agents are accusing major airlines of violating antitrust laws by colluding to eliminate commissions on ticket sales.

In a complaint filed in U.S. District Court in San Francisco, the travel agents claim that 21 airlines conspired to ban commissions to agents who sell tickets for the carriers. An attorney for the plaintiffs says the industry, beginning in 1997, reduced 10 percent commissions to 8 percent.

Two years ago, commissions dropped to 5 percent of the ticket price and in March 2002 many airlines eliminated commissions.

A similar suit, which has class-action status, is pending in a federal court in Wilmington, N.C.

The 49 plaintiffs in the San Francisco suit opted out of the North Carolina case.

This case has an amusing premise: the airlines should be punished for making their operations more efficient, thus reducing the need for intermediaries such as travel agents. When you think about it, the entire travel agent profession has been rendered essentially obsolete through the use of Internet-based reservation systems. This is precisely the sort of "consumer benefit" the antitrust laws theoretically won't interfere with, but at the same time antitrust theory always holds the larger company (i.e. the airlines) to be the guilty party in any transaction where another party is unhappy.

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