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Agents vs. Airlines
Kirby's Korner · December 17, 1999

This column is supposed to deal with online travel issues. It has compared hotel Web sites, urged the creation of a golf mega-site, and suggested that Internet travelers look in on Usenet newsgroups.

Recently, though, the column has caught the attention and ire of travel agents, based mainly on an article supporting the creation by four airlines of an online agency Web site and my response to that.

The reasoned responses deserve hearing, and this edition is dedicated to that. Next time, however, I promise information that those of us outside the insular travel industry can use.

What is the future of travel agencies in this brave new world of lowered airline commissions and the Internet?

As I indicated last week, I received extremely thoughtful responses to my statements about the ongoing relationships between travel agents and travel suppliers -- the airlines, hoteliers, and car rental companies the rest of us have to deal with. Some of the responses came as late as seven hours before this column was written, but rest assured I've considered them all.

And, let's be honest, the responses dealt not with "travel suppliers" but with airlines specifically. Many agents indicated they had turned their businesses around by looking to cruise lines and tour packagers for sales, but many of these expressed a fear that the alternative travel sources will follow the airlines in lowering commissions to agencies if the airlines are successful.

In short, the correspondents said, this is not a good time to be a travel agent. Many distinguished between small businesses and large, saying that the American Expresses. the Carlson Wagonltis, and the Rosenbluths Internationals will prosper, whole the mom-and-pop shops will not.

This is is as good a place as any to express one bias I have, although I have not made it clear in the last series of columns. For most issues, I see little difference between online agencies and brick-and-mortar agencies. Sure, they're competitors, but they still face the same aggressive tactics from airlines. If brick-and-mortar agencies think they have it tough working with a 5 percent commission, they should see how it feels to work with a $10 cap on commissions that online agencies have.

In short, I think the average mom-and-pop agency has more to fear from American Express than it does from a mid-sized online agency such as 1travel.com.

Second, any fair reading of my columns will show a distinct compassion for travel agencies, even though I may not agree with them on every issue.

Finally, let me acknowledge what I indicated in my first column on this subject: the Web site being developed by Continental Airlines, Delta Air Lines, Northwest Airlines, and United Airlines isn't yet live, so it is something of a special case. We don't know yet if it will fairly reflect airline prices in the same way American Airlines' sister venture Travelocity.com does, or if it will show bias. I think competitive pressures among the four airlines will require equal treatment; many agents disagree. We'll see how it turns out.

The responses I received were fodder for a degree in dysfunctional business relationships. Many agents challenged the airlines' greed, a question we'd be debating in another forum without the Internet. I don't dispute this accusation, and I fear it may lead to many horrors the agents pointed out -- lack of consumer choice and the inability to make changes and corrections.

Several agents took umbrage at my comparison of the travel marketplace to the traditional retail market, noting that traditional manufacturers (i.e., the airlines) don't compete with retailers (i.e., the agencies). The distinction has never been true, and it is becoming even less true in the world of the Internet. Just last week I purchased an expensive kitchenware set from a manufacturer, not because it was cheaper but because I couldn't find it anywhere else.

Some correspondents said the airlines see the agency community as a competitor because it is able to compare prices for consumers. I agree. That is why most of my travel is done through a traditional -- if Internet-savvy -- brick-and-mortar agency. The trick is for traditional travel agencies to convince the traveling community that they can provide better service than the airlines can.

Some agents applauded my call that agencies deal in "net fares" -- taking a set fee from an airline for a trip and boosting it to customers to cover costs and a profit. "I, in fact, wish the airlines had gone to 'net fares' this last time around," an agent said. I'm not sure that's the final solution, but it sure would solve many questions about where agents' loyalty lie.

Even without net fares, some agents said, "I do consider myself to be a representative of my clients, not the airlines."

Finally, I saw a lot of Internet-bashing. I still don't buy it. If someone came up with an alternative distribution method -- say, a telepathic connection between a buyer, retailer, and distributor -- would this be the reason retailers feel threatened? Maybe so, but it wouldn't be logical.

I've long argued that the Internet is the travel agent's best friend, and some correspondents agree. "Agents do not fear the Internet," one said. "On the contrary, most of us embrace it and use it as a tool." One agent friend of mine told me how he, before the Web, spent an hour on Usenet and other resources and came up with a complete itinerary for a customer to use when going to London.

"I didn't expect you to spend so much time," was the response.

Agencies have to embrace the Internet, recognizing that it is the future of point-to-point travel distribution. Many will still make a living selling cruises and tour packages offline, and many will survive for years if they sell only airline tickets.

But as many of my correspondents realize that travelers can get customer service offline from online agencies such as Travelocity and Expedia.com -- many don't know that yet -- the universe for simple travel products will contract.

I'm sorry about that in many respects. I live in the Washington area, with easy access to three airports. I don't know, always, that Southwest Airlines has a cheaper flight not available from nearly any other online agency except Travelocity.

But I wouldn't know that if my brick-and-mortar agent doesn't use Sabre as its GDS. And this type of issue, rather than Internet-versus-us, is what agencies need to face.

By the way, I just wrote two articles for my "real job" for Interactive Travel Report on alternative distribution systems for travel agents. If they are feeling pinched by traditional GDSs and don't want to look into agency-owned efforts such as the Genesis project, they might want to check out Global Reservation System or Whiplash. I'll e-mail the articles on these two systems to those who ask.

David Kirby is the editor of the Interactive Travel Report. His column appears on Friday. You can reach him at david@ticked.com.