Canadians Uncap Borders

<H1> Canadians Uncap Borders</H1>By Jay Campbell

The two major Canadian air carriers this month rescinded their plans to cap transborder commissions (<I>BTN</I>, June 24), but left in place the September cap on domestic Canadian commissions.

"We went back because the U.S. carriers didn't match," said Paul Fowler, spokesman for Canadian International Airlines. Asked why American Airlines, which owns part of Canadian-and which insiders say really runs the carrier-didn't match, Fowler said, "I was told that it is because AA is allied with CAI that they couldn't match, and then no one else did." U.S. carriers could be waiting for the beginning, if not the outcome, of the commission cap trial before making any additional commission moves, although Northwest did cap online bookings (<I>BTN</I>, July 29).

Still in effect will be the cap on domestic commissions of about $20 one way (based on current exchange rates), with a raise in base pay from 8.25 percent to 9 percent.

Canadian travel managers and agents predicted that the caps would speed the transition from revenue-share contracts to fee-based contracts, transforming the agencies' role. Sources also said the moves will spur net fare deals and a greater focus on cost controls.

That won't change with the elimination of the transborder cap, said consultant Samir Andraos, president of Aim International Management in Montreal. "They'll cap it again anyway," he said. "In the next few years, I see no commission at all. We're still advising corporations to move toward fees.