A business class ticket from Los Angeles to Hong Kong for $500
with no advance purchase? Or $800 for a ticket from Dallas to New
Zealand with a 20% agency commission. Is it possible? You bet. Is
it rare? Not with consolidators.
So why isn't every agency selling these tickets every day?
Because of one unfortunate name: "consolidators" and its
connotations. For years the term consolidators represented a "dark
corner" of the travel industry. They were born in obscurity and
nurtured in the shadows of small back offices of East and West
Coast cities.
Today consolidators are a major power in air travel retailing.
The largest are multimillion-dollar companies. Still, many agents
are apprehensive about this sector, partly out of fear of the
unknown.
Definitions
To effectively use consolidators, we need to know how they
operate. A consolidator is a type of air travel wholesaler. There
are two types: consolidators and tour operators who sell air only.
Both have high-volume contracts with airlines that offer either net
or high-commission bulk fares.
Operators selling scheduled air without car and hotel are
sometimes called wholesalers to describe their air-only sales
function. They contract with the airlines for bulk fares that they
use in their packages. However, to increase their volume, most will
sell air alone, as well.
Consolidators also have bulk or net contracts with airlines.
They get the contracts because of a proven ability to deliver a
very high volume of sales. Most domestic airlines view them as
high-volume agencies. Many consolidators have their own very
profitable retail outlets under different names. Because their
retail operations cannot achieve the volume they need for high
commissions, most are careful not to undercut their retailer
clients.
Be careful to distinguish real consolidators from pseudo- and
semi-pseudo-consolidators. A true consolidator has contracts with
all the airlines it represents allowing it to offer high pay or low
net fares.
Pseudo-consolidators do not have such contracts. These wannabes
buy tickets from other consolidators and resell them to agencies.
Others are agencies calling themselves consolidators to give an
illusion they offer exceptionally low fares. They usually do not
sell to other agents.
Semi-pseudo-consolidators are smaller firms that have contracts
with a few airlines, but when they are unable to fill an agency's
request, they obtain the needed ticket from another consolidator
and take a small percentage for the effort. There is a significant
number of such consolidators, and it is difficult to identify
them.
Pros and cons
The consolidators' very low fares and large commissions are
certainly the key advantages in using their services. There are
other advantages. Most consolidator tickets do not have the same
restrictions as tickets on the CRSs, such as Saturday-night stays
and advance purchases. Many consolidators can obtain frequent flyer
credits for travelers and sales credit for the agency with the
airline on which the ticket was written.
There are disadvantages. Most significantly, there are still a
few marginal operators. The challenge is distinguishing these firms
from the majority of stable firms. Two publications help. Jax Fax,
the primary advertising medium for consolidators, says it does not
accept advertising from questionable firms. The other is the Index
to Air Travel Consolidators, which agencies use to help evaluate
consolidator reliability and for agency ratings of each firm.
Another primary disadvantage is that consolidators offer
notoriously poor service. Many don't take credit cards but want
payment in advance. Fares cannot be conveniently researched on a
computer. It takes phone calls to a variety of firms, and sometimes
it may take a half-hour or more to get a quote over the phone. Some
firms offer computer access to fares but you are limited to these
firms, and seat availability is generally not accessible to the
trade.
Most consolidator tickets are available only for international
flights. In the past, there were a few on domestic routes, but very
few. However, this is changing. For example, CL Thomson in Los
Angeles said there is a growing availability of domestic
consolidator fares. According to Dionisio Lee Jr., vice president
of marketing, consolidators now offer domestic fares on long
routes.
These, however, are not on the major carriers. Selling via
consolidators avoids creating a fare war with the majors, which
would occur if the fares were published on the CRS systems, Lee
said.
He added Thomson has sought out domestic options because of
demand brought on by commission cuts.
Picking a Consolidator
Despite some disadvantages, it is difficult to imagine running a
successful agency without using consolidators. Evaluate each firm
carefully before doing business.
The most effective way is call the airline with which the
consolidator claims to have a contract. Even domestic airlines that
may be reluctant to admit they use consolidators will confirm they
work with a firm if they have confidence in it.
In addition, ask the length of time the company has been in
business and its size. Companies in business five or more years and
with sales of $10 million or more will tend to be less risky. That
guideline is not a guarantee, but it shows a record.
Check with several consolidators for a particular fare. Each
firm has different commission levels or net fare prices because
each has different contracts with the carriers. Therefore, their
fares or commissions will vary by the markets or airlines they
represent.
By taking the right approach to consolidators, you can
capitalize effectively on this powerful marketing tool.
Gary Schmidt is the owner of Travel by Nelson in Woodbury,
Minn., and president of Travel Publishing Inc., one of whose
ventures is the Index to Air Travel Consolidators.