Delta Airlines and Salt Lake's "Big Three" travel agencies - Morris/Ask Mr. Foster, Murdock Travel, and Bonneville Beehive Travel - have entered into preferential agreements on ticket sales and computer systems that are hurting smaller competitors, according to a complaint filed this week by 22 Utah travel agencies.
The complaint, filed with the U.S. Department of Transportation in Washington, D.C., seeks a cease and desist order along with civil penalties and court costs against Atlanta-based Delta and the three Utah travel agencies.The 20-page document says the defendants victimized smaller travel agencies in Utah, as well as the general public, by establishing preferential agreements ". . . in violation of the Federal Aviation Act, Department of Transportation regulations and the federal antitrust laws."
Complainants joining in the action are AA Cruise and Travel, American International Travel Inc., Butler's Travel Station, Canyon Travel, Cosmopolitan Travel, Crossroads Travel, EZ Travel, Excelsior Travel, F&T Tour West, Filippo's Travel inc., International & Domestic Travel Inc., Lakeview Travel, Leisure Travel Inc., Modern Travel, Nomad Travel Inc., Personalized Travel, The Lincoln Travel Center, Thomas Travel, Tour West Travel, Uniglobe Red Carpet Travel, Westgate Travel Inc. and ZCMI Travel.
According to the complaint, the "Big Three" agencies control an estimated 65 percent of the Utah-originated commercial air travel, reservations and travel service market. It says that 10 to 12 months ago Delta and the three agencies began negotiating contracts involving ticket sales and purchase of DATAS II computer reservation systems.
"Such continuing contracts, combinations or conspiracies have substantially and directly affected trade and commerce in the sale of commercial airline tickets for travel originating in Salt Lake City," says the complaint.
The three agencies, the complaint says, have all bought or are in the processing of obtaining the DATAS II equipment, which the complainants say will save Delta fees the airline is charged when a ticket agent books a Delta flight through a competing reservations system, such as SABRE or PARS.
"Given the volume of Delta's flights out of Utah, it is estimated that the agreements with the Big Three to use DATAS II could save Delta substantially in excess of $1 million per year."
In return for their agreeing to use DATAS II, says the complaint, Delta has given preferential treatment to the three agencies, including free or reduced cost on equipment, free installation, increased commissions on certain bookings, unlimited passes, waivers of advance purchase requirements, free tickets for corporate account use, and others.
The complaint also says Delta has agreed to provide the three agencies with special "bulk" or "tour-based" fares that require no advance booking by travelers and represent a "significant reduction" from standard fares. Although the smaller agencies were eventually - after numerous requests - granted a revised air fare tour program by Delta, the fares, complainants say, are still not competitive with the Big Three.
"Delta's refusal to deal with other Utah travel agencies and provide comparative bulk fares is predatory . . . and is in furtherance of Delta's monopoly of commercial air travel service out of Salt Lake City."
The complaint says the preferential bulk fares are sold by Delta below cost and are subsidized by higher fares charged to the general public.
"Thus, consumers flying to other destinations, or who otherwise don't qualify for the bulk fares, are penalized."
Delta's "discriminatory practices," say the 22 agencies, have caused a 30 to 50 percent reduction in their revenues.
"Many of the smaller travel agencies are likely to go out of business" as a result of the Delta/Big Three agreements, the complaint says.