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Online agents will introduce service fees
WTM 2003 Special: In this low or zero commission environment, it is inevitable that online agents in Europe will start charging service fees, according to Opodo chief executive, David Scowsill.
Speaking at the EyeForTravel “Strategies for Travel Distribution” conference at WTM, Mr Scowsill told the audience: “It is clearly heading to a 0% commission environment, and online agents are going to have to adjust. In the US Orbitz went first with a service fee of $5 in December 2001, then Expedia matched this by introducing a $5 fee 12 months later. It has created a significant income stream.
“In Europe the introduction of service fees by online agents is inevitable in the next six months.”
In the question and answer session later, Mr Scowsill defined the two types of fees – tranasction fees charged to the consumer for making a credit card booking online, or added to the cost of a call centre booking, and a service fee, charged to the consumer for the value-add service.
Mr Scowsill told TravelMole after the event: “It has to be transparent. As long as people understand that the market has changed because airlines are dropping commissions and agents are having to pass the extra cost onto the consumer.
He added : “When Orbitz launched fees in the US it had no growth impact.”
OTC chief executive, Mark Jones told TravelMole that OTC started charging a service fee in January of £12.50 per booking for any published fare where the commission is less than 7%. He said: “On one of our sites we have tried removing the fee and conversion rates went up, but we still make more money when we charge the fee – the difference was not enough to justify dropping it.”
Mr Scowsill also said in his presentation that he thought that despite being slow to take off online, the package holiday would take “a huge leap forward” in the next 12 months.
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