UAL Exec Comments on Agency Commission Reduction Plan

First reported by The Beat, United Airlines today publicly discussed plans to slash travel agency commissions, also known as overrides or incentives.

CFO Jake Brace during the Merrill Lynch 2008 Transportation Conference said distribution costs continue to be "a major focus, although the industry has made great strides over the years. Commissions are a great example of that. They were reduced a few years ago when we eliminated base commissions but despite the reduction, they remain a very significant line item on most carrier's P&Ls. We have recently launched an initiative to make large reductions in commission expense on a worldwide basis."

United has said the initiative--targeting $100 million in annual savings--includes eliminating "hundreds" of agency incentive agreements from its TMCPlus program, reworking all other such deals and "substantially" lowering base commissions paid to agencies in non-U.S. markets. United did not confirm information from sources suggesting that reworked agency incentives would be based on fewer eligible fare classes.

US Airways also confirmed plans to cut agency compensation expenses.