Travel agents could go out of business as a result of new cuts in airline commission rates that will see millions of dollars taken out of the local economy.

And one senior travel executive has called upon the Government to intervene in a bid to persuade American Airlines to spare the Island its commission rate cuts.

Agents expect all the airlines to follow American's lead, potentially slashing over $3 million of local businesses' revenue out of a $70 million a year trade generated to the carriers through agencies.

Many believe the 40 percent commission reduction down to six percent of the ticket price, which American introduces from Saturday, will send some smaller agencies to the wall.

And even the larger companies who have diversified into other travel-related areas are expecting to have to cut costs or raise their fees to counter balance the loss.

Carl Paiva, executive vice-president of the Meyer Group of companies, said the cuts -- which have provoked a threat of a boycott in the Caribbean -- could kill some smaller agencies who depend on commissions to survive.

But he questioned the validity of what American was doing, which he said could be construed as an overseas organisation forcing unjust business practices on the Bermudian economy.

"Some small agents will go out of business,'' he said. "You can't lose fifty percent of revenue and expect to survive.

"There is nothing you can do. The Government should look at it, because what it means is unfair practices by a foreign company operating in Bermuda, cutting commission which means Bermudians lose jobs.

"The airlines control our tourist destiny, airfares are very high and the Government is well aware of that.'' Meyer is to look at its fee structure in light of the move, and the end result could be the consumer paying more for tickets.

Caribbean agents have threatened to boycott American Airlines, which virtually has a monopoly in the region, but Bermuda's travel agents are almost powerless to take any action, since each Island carrier has almost total dominance over each route.

One agent said: "If you wanted to discourage travellers from flying with one airline, what is the alternative? "It is safe to say the customer will have to pay more, which is unfair because the airlines are not losing out at all. It could mean big money from small agencies who may do 90 percent of their business with American -- that is a big chunk.'' But the agent said there was a possibility that they could direct business away from certain airlines when putting together group travel -- using other carriers who serve alternative destinations.

"For the agents in Bermuda there is not much they can do, we have no clout -- if this represented 50 percent of their business they wouldn't do it,'' the agent added.

Gary Kent-Smith, managing director of the Donald Smith Travel Connection, admitted there was little they could do about the cuts.

He said: "If you don't like it, there doesn't seem to be much choice in the matter. You can't negotiate from strength.'' Mr. Kent-Smith said the reductions had been imposed on the US and Canada for a while, and Bermuda agents had been expecting the axe to fall on them at some point.

American Airlines local manager Carole DeCouto said the reductions had brought the Island in line with the rest of America and the Caribbean.

She added that Bermuda did not have a cap on the amount of commission -- still giving agents the opportunity to make hundreds of dollars on first and business class tickets.

"We are still better off than the US in that respect,'' she said. "Our costs of doing business in Bermuda has increased by one third.'' Mrs. DeCouto added that a new computer system at the airport, "forced on us'', had added substantially to their costs.

"It is a business decision that we had to face.'' Carole DeCouto AIRLINES FLY BUSINESS BUC