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The
Airlines' Plan for Price Domination is on the Web
The
full web-only version of this story, taken from the Summer 2002 edition
of the Zeitgeist Client Newsletter
As we suggested in our last issue, the American airline industry was
beyond culpable for the way they reacted in the wake of September 11th.
In a single handed stroke, the industry (save Southwest
Airlines) laid off tens of thousands of workers in a mass
admission of poor management.
Had they been just a little less eager to cut their losses, the markets
wouldn't have tanked so precipitously. But it all came out as "the
poor airlines." Just like the lack of media outrage at the announcement
this spring that the airlines were eliminating commissions to travel
agents.
While the work of travel agents may not impact all of the destinations
that receive this newsletter...they most certainly impact those of us
that travel on behalf of our destinations. Which is why we offer the
following recent rant to his clients from Burkhalter
Travel's Scott Mast:
 "Well,
the airlines have done it again. For the fifth time in six years, travel
agency commissions have been lowered...this time to zero. Travel agents
have known that this day was coming, and last Thursday's announcement
by Delta did not come as a surprise - only the inopportune timing with
the effects of the recession and September 11 beginning to wear off
just a bit.
Actually, the airlines' motives are not hard to understand. There has
always been a conflict between airlines and travel agents because our
job is to get our clients onto their airplanes at the lowest
possible cost, while their mission is just the opposite - getting you
onto their planes at the highest possible cost. Travel
agents work for their clients, not the airlines. So, it is
only natural that they would want to take strong steps to gain virtual
control over their fares. And, if they're successful at doing that,
travelers will end up paying significantly higher fares. It's literally
that simple.
I'm not going to try to sugar coat this development. All travel agents
have taken a major revenue hit, and that lost revenue must be made up
with higher service fees. No company does what they do for free, and
travel agencies are no exception. We use service fees to pay the light
bill, rent, staff salaries, etc., just like everybody else.
Said I wasn't going to sugar coat this and I won't. We know our clients
have other options, as they always have had. You clearly have the option
of booking on-line, or calling the airlines direct. If a travel agency
is still in the "order-taking" business,
it offers the traveler little incentive for doing business with it.
On the other hand, if an agency is truly in the travel
service business, that is another story indeed. Agencies in this second
category do things for their clients that the airlines and the internet
do not...and literally cannot do for them. As nationally-syndicated
consumer
advocate Clark Howard said in a speech to travel agents
in Atlanta over a year ago, "The airlines are great at
getting their airplanes scheduled, re-fueled, maintained and into the
air, but they stink at giving service at any level to their passengers."
Let's talk about the "Web." That's the hot topic
these days and significant airline business is being done that way.
For travelers that have the time, patience and flexible travel plans...and
who make very few changes or cancellations, booking air on-line is still
an option. After due consideration of all of the changes and cancellations
that travelers make, the convenience of booking cars and hotels at the
best rates, awareness that 95% of the fares produced by travel agents
are the same or lower than web fares, the convenience of having their
personal travel profiles on record with their agency, along with the
personal accountability of a travel agent when things go wrong...the
services of a travel management company versus the Internet look very
compelling indeed. And, please remember one thing - (virtually)
all airline tickets purchased on the internet are both non-changeable
and non-refundable.
Make no mistake...the airlines are trying to lure their passengers to
their web sites for one simple reason - to lull them into a false sense
of security with scattered "specials" and
then hammer them on subsequent fares, throwing in occasional "teaser"
fares to keep the game going. However, if a large enough percentage
of business travelers get into the mindset of believing they're getting
the lowest fares on the airline web sites, the airlines will win the
game by gradually increasing fares. They can't afford
not to.
According to a recent study by Topaz
International, a Portand (OR) based independent airline
auditing company that is in business solely for the purpose of advising
corporations on the relative value of booking on-line versus going through
a travel agency, only 3% of all internet fares are "Internet-Only"
specials. The study further showed that the average fares offered by
travel agencies were 24% lower than web fares. If you have interest
in talking with Topaz, or varifying these claims, please call Michelle
at 503-254-4242.
During another travel agent presentation in Atlanta this March, a prominent
industry official quoted a senior airline executive as recently saying:
"We love those know-it-all business travelers who think they have
all the answers. 95% of the time, the fares they see on our website
are the same as they would get from a travel agency...and on the other
5%, we kill 'em." I can't add anything to that.
Our agents are constantly checking web fares. If we find fares on the
web that we can't book through our system (the largerst and most comprehensive
system in the world), we'll tell you about it. You may wish to book
through a website and obtain a lower fare. You then have a web fare
and a web ticket...no service, no changes, no refunds...you are on your
own. Our tickets are quality controlled from the second you book to
the second you return from your trip...fares, seats, e-tickets are all
monitored for you. In the long haul, you are better off allowing us
to monitor your airline reservations...you'll be dollars ahead.
Bottom line is that if travelers don't support travel agencies, they
will end up paying more dealing directly with the airlines. Over the
past six years when the airlines have needed a boost to their bottom
lines they have dipped into the pockets of travel agents. Now that they
pay zero commission, there is no place else for them to go the next
time they need a quick fix, other than directly to their passengers.
That's just the simple unvarnished truth.
Travel agents know the ropes in this business and they make life easier
for their clients...plus save them significant amounts of money
. And, after six years of commission cuts, caps, etc., travel
agents still handle over 70% of all airline reservations. What
does that tell you? It tells you that savvy business travelers know
that we're on their side...and they appreciate the value of their services.
We have been in business for many years and we know that our agent staff
are our biggest asset. They are the best. We can only hope that you
will understand our decision to raise service fees, appreciate what
we do for you and continue to support us. We appreciate your business
and want to reassure you that providing you with the best value in travel
management services is our number one priority.
Remember: without a travel agent, you're on your own. We're
on your side...the airlines are not!"
In this day of sugar-coated tip-toeing around the truth, Scott's
"straight up" comments to his clients are as refreshing as
the airline's motives are disturbing.
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