Flight-only a ‘loss leader’ for agents without fees

TravelMole Fast Conference Special: Agents can continue to make money by selling flight only tickets but this has only been possible since they started charging fees. This was the message from some of the panel at TravelMole’s first Fast Conference on Tuesday. When asked by an audience member whether agents could continue to justify selling flight-only, ABTA chief executive, Ian Reynolds said they would continue to do so because of service fees. He said: “About 90% of ABTA agents are now charging fees where the commission, if there was one, doesn’t cover the costs of the transaction. “There is still a place for good travel agents with good knowledge of the product. But agents that don’t continue to improve their service will go out of business because they can’t charge a service fee without justifying it.” He added that agents would increasingly specialise and focus on higher-end transactions. Mr Reynolds said: “If you are very big and part of a vertically integrated operator you can get your content at the right price and probably still survive being a generalist, but for the smaller companies they are going to have to get very good at something – everyone will specialise.” Fellow panel member Richard Lovell, chairman of GBTA and Carlson Wagonlit executive vice president EMEA said: “Not all of the market will drift to the bottom. People do not automatically book the cheapest flight – there is still a role for agents who can match product to demand.” Mr Tyler-Bennett, who is director EMEAA, airline distribution hosting and IT solutions for Worldspan agreed. He said: “Agents may have to start offering air content as the loss leader, but making the money on adding the hotel, car and so on. Agents will make money through dynamic packaging.” Mr Tyler-Bennett said he predicted consolidation for online and offline agents. He said: “Like the airlines have polarised into alliances so will e-commerce players and offline agents start to consolidate.” Cheapflights.com chief executive David Soskins was also on the panel. He said this would also be true for the online industry: “At the moment there are far too many sites that look the same.” Mr Soskins said the consumer would drive change in the market. Mr Tyler-Bennett agreed. He said: “Differentiation is the key in this game. This industry has bred a very sophisticated consumer who knows exactly what they want, and we have to accommodate that.” Report by Ginny McGrath For information on future TravelMole Fast Conferences, please visit www.travelmole.com/fastconferences, email [email protected], or call +44 (0)20 7691 3292.

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