Little Policing On Bogus Travel-Agency Discount Lists

Aug 8, 1993

Peter S. Greenberg

This is the second article in a two-part series by syndicated columnist Peter Greenberg alleging a widespread abuse of travel-agent discount privileges in the travel industry. Here he discusses the extent of the problem and lack of action to correct it.

How much are phony travel agents costing you? Until CBS began its five-month investigation, no one in the travel industry was keeping track.

Then, Bruce Rosenberg, Hilton Hotels vice president of travel agent marketing, admitted that the chain had lost nearly $1 million in 1992 because of phony travel agents getting discounts at Hiltons.

Keep in mind, that nearly million-dollar figure is only what Hilton could identify. The real travel industry total is harder to specifically quantify, but even a basic (and conservative) estimation is staggering.

Consider: There are more than 32,000 travel agencies in the United States submitting agency lists. Of the 250 lists examined at random by CBS, we found an average of four questionable names per list. (That doesn't mean every agency is suspect. Some agencies had many bogus names on their lists. Others had none.) Let's just assume that - taking that four-name average - just two non-travel agent names per list flew on an AD75 ticket (agency discount, 75 percent off) and received substantial discounts at hotels and car rental agencies.

Based on a trip from Los Angeles to Chicago, and staying three nights at a hotel, the average savings would be $1,000. Then, assuming that the two pseudo-agents per list only flew once a year, the loss to the industry would be a minimum of $64 million - costs passed directly on to consumers.

(Last week, Earlene Causey, president and chief executive officer of the American Society of Travel agents, characterized the July 29 CBS program on this issue - co-produced by Connie Chung-Peter Greenberg - as rife with "sensationalized tactics and overstatement." Causey contended that "travel suppliers have never considered this a signficant problem." She noted that, under ASTA's ethics code, misrepresentation of agency personnel "can result in censure of expulsion from the Society.")

What's being done?

What's the industry doing about it? Is anyone policing the travel-agency lists? Not really.

Since deregulation, no single government or industry organization has been given - or really seems to want - that responsibility. Again, it seems that no one in the industry wants to bite the hands that feed it - travel agents. As a result, this abuse has been written off as a cost of doing business. For the past 15 years, agency lists have simply been compiled and sent on to the suppliers - airlines, hotels, et al. If you're on the list, you're simply not questioned.

"I can put anyone I want on the list," argues Michael Miramontes, president of PPT Travel, a Culver City, Calif., agency that has about 100 names on its list for the Airline Reporting Corporation, the airline-owned company that officially accredits travel agents. And they're travel agents?

"No, you don't understand," Miramontes says. "They are associated in the travel industry."

What does that mean?

"I have people who work for me who go out and sample the service on an airline or cruise line."

That's a criterium for being listed?

"Yes," he says. "I decide."

For example, on one of the agency's lists, we found more than 23 clients, relatives and friends.

"Look," Miramontes says, "we're the airlines' greatest salespeople. If they don't like who's on my list they can come down here and tell me, and then I just might not book their airline."

At another Los Angeles agency, Travel Master, names that showed up on the list included the owner of a French restaurant, the chairman of a large semiconductor corporation, and Armand Marciano, the senior executive vice president of Guess? Inc., the clothing company giant.

Marciano insisted, through his attorney, that he had no knowledge of ever being on the travel agent list. And yet, according to the agency's list, which has to be completed and updated each year, he has worked at the agency since 1984. The owner of Travel Master acknowledged that the clothier is a close friend.

Some agents have complained

Agents like Nancy Bleiweiss have complained about the phony agents and the abuse of the agency lists to the American Society of Travel Agents, as well as the Airlines Reporting Corporation. ASTA says it has never received a single written complaint about phony agents. ARC sent Bleiweiss a letter saying they sympathized with her but could do nothing about her complaint.

(A half-dozen Seattle agents informally polled by The Times last week, however, said misrepresentation was not uncommon, though it was still far from the norm in the industry. All the agents blamed suppliers such as airlines, hotels and rental-car agencies for not policing closely enough.)

"It's not our responsibility," says David Collins, president for ARC. "We're in the bookkeeping business. It's up to the airlines to establish the conditions for those names."

Richard Knodt, chief operating officer of ASTA, agrees. "It's a supplier problem," he says. "The airlines and hotels are the ones agreeing to give out these discounted seats and rooms. We're not an enforcement agency," he says.

Knodt referred us to the International Airlines Travel Agent Network - a corporation also owned by the airlines - which acts as the link between travel agents and 77 international airlines. IATAN also keeps travel agent lists, but says it has a solution to the problem - using photo I.D. cards.

Two big problems with the IATAN cards: One, the system is voluntary. Two: Who is providing the names to IATAN to issue these I.D. cards? The very agencies that put these names on the printed lists. Cards or no cards, no one is authenticating the names.

"It's a joke," says Bleiweiss. "until someone takes a more vigorous stance on agent certification and identification, rampant abuse will continue."

Changes being encouraged

In the wake of the CBS investigation, the industry has stopped denying the existence of abuse. Both ASTA and the Association of Retail Travel Agents have called for a tougher code of ethics. Specifically, ARTA is assembling a working group to develop a program to verify, certify and identify legitimate travel agents.

American Airlines has taken a particularly aggressive position, conducting its own investigation of travel agencies. It also is considering a policy change that would require that agents submit proof of employment before being considered for discount travel privileges. American also field-audited some agencies, including two we identified as having questionable names on their lists. It found at least five cases of phony agents at Travel Master alone, and revoked their discount travel privileges. American is currently investigating 26 cases of discount travel at another agency. Peter Greenberg's syndicated column appears occasionally in the Travel section.