While the temptation to resist
changes to the travel distribution model is understandable, Mark
Pestronks call to action [Legal Briefs, Worldspan deals a sign of bad things to come
for agencies, April 24] is a waste of time at best and legally
risky at worst.
Instead of
proposing what might be seen as a group boycott disguised as a
letter-writing campaign, what travel agents need from legal and
business advisors is a brutally honest assessment of current
economic reality.
Electronic
ticketing and the Internet reduced the airlines need for ticket
distribution. In contrast, airlines will always need, and will pay
for, marketing. Marketing means adding value by moving travelers,
particularly high-value travelers, to a particular airline and
increasing its market share and revenue. Successful marketing
services will continue to earn override commissions.
Perennially
asserting some vast conspiracy among the airlines is reckless. No
conspiracy is necessary for the airlines to independently respond
to the opportunity to lower costs. Technology has enabled travelers
to do it themselves, lowered costs and changed the demand for
travel agent services, especially on simple itineraries.
Claiming that the
airlines are conspiring to change the business model is like bank
tellers claiming that a conspiracy caused the spread of
ATMs.
This new economic
reality affected travel agents first, but the GDSs are next.
Deregulation, combined with the new technology, gives airlines the
bargaining leverage to withhold or grant access to inventory in
return for lower costs. The GDSs will have to be more responsive to
their airline customers. This new leverage will lead to
participating carrier agreements with lower total booking fees. As
booking fees go down, travel agent incentive fees from GDSs will
have to be reduced or even eliminated.
But the new market
conditions are not all bad news. While the travel agent may provide
fewer services for an airline, the professional travel agents value
to consumers increases with the growing complexity of buying and
managing travel.
And despite the new
technology, or maybe because of it, travel is becoming more
complex. To name just a few complicating factors: low-fare carriers
that only sell directly, additional fees for aisle seats or other
amenities, bankruptcies, variable online travel agency fees,
upgrade availability, frequent flyer mileage managements, codeshare
confusion and mind-boggling fare structures. These present a
daunting labyrinth to many travelers. While airlines may pay less
in some areas, many consumers should be willing to pay a little
more if they appreciate the value of the assistance a professional
travel agent can provide.
Ironically, Mr.
Pestronks call for action is an effort to preserve the status quo
despite dramatic changes in the commercial environment, and it
risks being perceived as the solicitation of an unlawful boycott. A
much better strategy for todays travel agents is to embrace
economic reality with a creative and entrepreneurial search for new
value-added services that are still in demand by suppliers and
consumers.
Gary
Doernhoefer is a former vice president and general counsel of
Orbitz. He is currently living in Sweden and will return to a
consulting practice with his own company, Skylarc LLC, this
summer.