June 2, 2023


Just Do Travel

Can an agent represent a client’s and a supplier’s interests at the same time?: Travel Weekly

Mark Pestronk

Mark Pestronk

Q: I know that a real estate agent is generally not allowed to be the agent for both a home buyer and a home seller in the same transaction, but what about travel agents? Is my agency legally the agent for the supplier, the client, or both? To which party do I owe a duty to act in that party’s best interest? For example, must I always offer the lowest rates and fares, as my client wants, or do I always offer my agency’s preferred suppliers, even if the prices are higher? To take another example, some tour operators’ terms and conditions state that the operator acts only as the agent for the company that ultimately supplies the actual services that the operator has packaged, but other operators state that the operator is solely the agent of the traveler. Which is correct?

A: Most travel advisors would agree that they are agents of the client in the sense that they have a duty always to act in the best interest of the client. However, that is not the end of the legal analysis.

Travel agencies are also agents for the suppliers that appoint them. Every agency with an ARC appointment has the right to issue tickets on airlines, and every agency with a CLIA appointment has the right to sell cruises. Appointed agencies have fiduciary duties to suppliers under the standard industry agreements.

The most authoritative statement of a travel agency’s status as agent for the supplier comes from a federal court decision in Illinois Corporate Travel Inc. v. American Airlines Inc., 700 F.Supp. 1485, 1497 (N.D. Ill. 1988): “This court remains convinced that its analysis of the relationship between airlines and travel advisors was correct and that accordingly, as a matter of law, American and its travel agencies have a true agency relationship.”

Conversely, in many consumer cases, courts have held that a travel agency is the agent for the client, as in Simpson v. Co. Nationale Air France, 42 Ill. 2d 496 (Sup. Ct. Ill. 1969): “In our judgment, Larkin was the agent of Simpson for the purpose of planning and implementing a European trip.”

So, can a travel agency be the agent of both parties? ASTA answers affirmatively in an excellent 2019 white paper that is available to members only: “Thus, putting aside the occasional reference to travel advisors as principals in their own right, which is insupportable in economic reality, one is left with the courts’ characterizations of travel advisors variously as agents of suppliers, agents of travelers or agents of both — brokers.”

Doesn’t being an agent of both buyer and seller present a conflict of interest? Not in my view, because travel agencies do not have a duty to their suppliers to sell at as high a price as possible. They are only required to follow the suppliers’ rules.

On the other hand, when agencies act as agents for clients, their duty is to get the best deal and best service for the price that the client wants to pay. I see no conflict of interest.