Agents Angered by Amtrak Commission Move

Amtrak’s decision to stop paying commissions on its long-haul train routes has angered travel agents who see it as yet another supplier betrayal of the agency partners who supported its growth.

Several agents also questioned the fairness – and even legality – of Amtrak’s actions.

Amtrak announced earlier this week that, effective Nov. 1, it will pay commission only to members of its two national account partner travel agencies – Vacation.com and AAA.

Those commissions, of 8% to 10%, apply only to tickets sold for Amtrak’s long-distance trains, as Amtrak has not paid commission on bookings on its highly traveled West and East coast corridor trains for years.

Agent commissions, also of 8% to 10%, on Amtrak Vacations packages are not affected.

Going the way of the airlines?
“Amtrak is following what the airlines did years ago,” said Goran Gligorovic, executive vice president of Omega World Travel in Fairfax, Va.

But at least with the airlines, agents initially had the option of booking other airlines, he said.

“When it comes to long-distance rail service or service on the East and West Coast corridors, Amtrak has a monopoly,” Gligorovic said.

An unequal situation
Gligorovic and other agents also objected to what Gligorovic termed “an unequal situation” – with Amtrak maintaining commission payments to members of just two agency groups, while discontinuing payment to all others.

“Why are those agencies singled out versus the rest of the agency community that supports them?” asked Mimi Cleary, vice president of corporate services for Milford, Mass.-based Atlas Travel.

“It seems unfair that they plan to continue commission models with specific agencies but not all,” Cleary said.

Legal implications?
Some industry members questioned the legality of a federally-supported entity offering preferential treatment to some agency groups over others.

But Amtrak’s move may only be “unfair,” not legally actionable.

Paul Ruden, ASTA’s senior vice president of legal & industry affairs, said that while Amtrak does receive government subsidies, “my understanding is that generally they [Amtrak] are allowed and expected to operate as any other commercial enterprise.”

“It’s a commercial decision on who to pay and under what circumstances. I don’t know what basis there would be to treat this differently than any other enterprise,” he said.

Future of agency partnerships
There was also speculation in the industry about the nature of Amtrak’s contractual agreements with Vacation.com and AAA and whether Amtrak will renew those agreements when they expire.

An Amtrak spokesman said the firm would not comment beyond the statement it issued when announcing new limits on its commission policy:

“Amtrak is restructuring its sales commission policy to match changes in the market, demand and sales priority. Travel agents continue to play an integral role in the growth of Amtrak passenger rail service.”

A matter of principle
For travel agents, concern over Amtrak’s action is more a matter of principle than a serious financial matter.

As corporate agencies, Omega and Atlas cater to clients who book significant volume on Amtrak’s high-speed Acela trains on the busy Northeast corridor.

But Amtrak stopped paying commission on corridor routes on both the East and West coasts more than 10 years ago, a move that saved it an estimated $5 million a year.

“Whatever money agencies were making with Amtrak, it is important that they’re losing it, but it doesn’t have the shattering effect of the loss of airline commissions,” ASTA’s Ruden said.

Working for free
Still, agents are dismayed by the implications of Amtrak’s move to limit commissions.

“It’s unfortunate that our industry continues to cut agency commissions and that often customers view TMCs as distribution centers, disregarding or minimizing the value of the services we provide,” said Atlas Travel’s Cleary.

Omega’s Gligorovic noted that “TMCs and online booking tools can’t work for nothing; the final result is that customers will see increased prices.”

Even agents who belong to one of Amtrak’s partner agencies can see reasons to be unhappy about the rail company’s decision to restrict commissions.

“I think every vendor, if we sell their product, should pay agents,” said Kate Murphy, president of Wings Travel Group, a Vacation.com member in Blue Bell, Penn. “This is a business.”

Wings Travel sells a lot of Acela tickets but also books groups on Amtrak, Murphy said.

Outdated technology
Other industry members noted that Amtrak’s support for travel agents has been poor in other ways.

Cleary said Amtrak’s technology is outdated and inefficient. “If we want to get an electronic ticket, we can book it in our system but we then have to call Amtrak to process the payment,” an option that she called both time-consuming and inefficient.

One retail travel executive, speaking off the record, said that “Amtrak’s technology is cumbersome, and their support is underwhelming.

“Many agents have shifted their business [away from Amtrak] already and are earning greater commissions through wholesalers whose technology and service are better,” the executive said.