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Tuesday, Feb 27, 2024

About The Lists–Airlines’ Online Ticket Services Add to Competition

Travel Agencies Switch to Fees and Package Deals

One would think the Internet would benefit a service-based business like a travel agency.

The Internet offers easy access for the user and a relaxed, hands-off, order-filling modus operandi for the supplier.

Travel agencies thought so and started their own Web sites.

Airlines thought so too. They created their own sites, complete with the online buying option, and started selling their own tickets.

The airline industry soon realized it didn’t need travel agencies to sell tickets for them anymore and didn’t need to pay commissions to travel agents. First airlines cut commissions to 10 percent of ticket value, then it was 8 percent. Last year, it fell to 5 percent.

Airline commissions, the once-great source of income for travel agencies, are expected to hit to zero soon, local agency executives said.

– Agencies Charge

Fees For Services

Agencies on the San Diego Business Journal’s List of Largest Travel Agencies that cater to the leisure traveler are charging fees now and moving away from booking airline tickets.

“We’ve had to start charging fees, unfortunately, as of January for airline tickets and we’re starting to sell more cruises and (group) tours and promote that,” said Regina Grevatt, manager of Fallbrook-based Branson Travel.

Branson, No. 12 this year, makes 70 percent of all sales to vacationers and with five agents sold almost $3 million in mostly domestic travel.

In addition to booking travel through industries that still need a ticket distributor and will pay commissions, Grevatt said, Branson has cut costs by issuing more electronic tickets instead of mailing them.

While Grevatt plans to book tours to Alaska this summer, Gil Saidy, president of San Diego-based Aer Travel, Inc., No. 6 this year, said he relishes the opportunity to operate his business without the airlines.

– Customers Will Be

Source Of Compensation

“We will not be reliant on the airlines to compensate us,” he said. “We’ll be reliant on our customers and the customers that see value in what we do will pay us.”

Aer reported $17.4 million in travel sales last year , 95 percent through corporate travel.

The airlines, he said, won’t go the extra mile to facilitate the corporate customer’s needs like a specialized, corporate travel agency will. Aer focuses on clients that budget $100,000 to $500,000 in yearly travel.

“If you’re going to do a simple round trip to Vegas on Southwest’s Web site that’s one thing,” Saidy said. “But when you’re a business traveler going to six cities in seven days you’re going to sit at that computer for hours trying to figure this thing out and you won’t get it right.”

In the 20 years Saidy has been in the travel agency business the basic core of the business hasn’t changed, he said. It is a service-based industry and it has a niche to fill.

“There are still delays,” he said. “There are still conventions in town and the hotels are all sold out. I mean that stuff is never going to change.”

– Service Charge Replaces

Lost Airline Commission

Most agencies now include a service charge to compensate for the lost airline commission. On average, the charge runs between $10 and $15 for domestic flights and more for international flights.

Some agencies like the Encinitas agency Traveltrust Corp., No. 3 this year, refuse to add the extra charge.

Instead, president Richard Meyerson said, Traveltrust agents search ticket databases to find the best priced tickets for their clients. The agency has also focused on attracting and retaining clients that seek the most economical tickets. Traveltrust topped $41 million in ticket sales last year.

Meyerson believes the individual traveler from a large corporation is more likely to pay whatever the airline charges as compared to the small business traveler.

“We really like to focus on clients that pay attention to their bottom line,” he said.

Meyerson said he understands the airlines’ desire to erase commissions despite the old airline claim the two industries were partners.

“The airlines are trying to do that because they’re trying to lower their costs of distribution and they’re doing a reasonably good job at it because all the airlines have been way more profitable the last couple of years,” he said.

The role of the travel agent will change in the coming years, Meyerson said. The agent will become more of a consultant to the traveler even though the airlines don’t realize it.

“The agent isn’t getting the benefit of a reasonable commission for our energies and efforts to sell their product,” he said. “If you were selling insurance or something like that you would get a reasonable commission from the people whose product you’ve sold. It’s really an adversarial position. At least it’s become like that.”


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