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Tourism Roles evolve for travel agents as airfares cut



Tourism: Weak Travel Market Prompts Rate Cuts

The availability of reduced airfares two weeks ago made for an eerie kind of looking glass, said local travel agent Scott Borden.

As the week of June 25 began, the lowest fares were available only through a Web site owned by several domestic airlines, said Borden, who owns and runs San Diego-based Top Flight Travel, Inc.

Travel agents and even the airlines’ individual sites couldn’t sell the low rates, Borden said.

Southwest Airlines wasn’t among the agencies offering the cuts, he said. But by the middle of that week, Southwest was offering even lower airfares to its markets, forcing the other airlines to match the rates, Borden said.

Southwest also made the fares available through travel agents and the general Web sites, he said.

“It was a very challenging week for us,” Borden said. “You kind of wondered if you were seeing the future where we were no longer going to be able to be a source of least-cost distribution then suddenly found ourselves back in that position.”

The airlines’ first rate cuts last month were prompted by weaker demand than the industry anticipated, he said.

For now, the price of flying Southwest routes, direct or with at least one layover, are dramatically lower, Borden said. For instance, a round-trip ticket from San Diego to New Orleans was $400 before the sales, and are currently as low as $158, he said. A trip to Boston that had been priced at $600 is now being offered for as low as $258.

As for international travel, a trip to London that was $1,100 is now $800, which Borden considers good for a summer fare.

For the most part, the rates remain limited to routes Southwest flies, said Regina Grevatt, manager of Branson Travel in Fallbrook.

A flight to Baltimore, a Southwest market, currently costs about $221 , while a flight to nearby Washington, D.C., where Southwest doesn’t fly, costs about $440, she said.

The cheaper airfares are prompting more calls, but not necessarily more revenue, said local agents, who agree that it’s a basic sales mechanism for the airlines.

The publicity generated by the low rates has bumped up the number of customer calls, Grevatt said.

Calls may have increased, but it won’t necessarily reflect on the bottom line for airlines or travel agencies, said Richard Meyerson, president and owner of Encinitas-based TravelTrust Corp.

It’s especially true for the corporate travel business, he said. TravelTrust’s business is 70 percent business travel, 30 percent leisure.

Many business travelers book their tickets at the last minute, so the lowered fares aren’t affecting them, he said.

Because the rates are lower, the commissions they generate are smaller, he said.

“Because the fares are cheaper now, the business travel is picking up a little bit because of that,” Meyerson said, “but it’s not necessarily making us more money.”

He doesn’t envision the cheap airfare offers extending past this month.

“Chances are slim because the airlines are already losing money,” Meyerson said. “This is going to make them lose even more money.

“They’re doing this because they want to get more bodies on their planes and so this is the incentive to try and get it done,” he noted. Improving cash flow is a main motivator for airlines, Meyerson said.

“They give this limitation that it all has to be ticketed by a certain date, and then they get to keep the money before you actually fly, so it usually helps the cash flow part of their business,” he said. “It definitely can’t continue on because they can’t make any money selling $200 coast-to-coast round-trip tickets.”

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