honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Sunday, June 10, 2007

SAVVY TRAVELER
Travel agencies play key role, even in Internet age

By Irene Croft Jr.

Service fees have helped keep travel agencies alive since airlines instituted their zero-commission policy.

Advertiser library photo

spacer spacer

Virtually all retail travel agencies now charge a fee for certain services. Fourteen years ago clients did not pay extra to purchase air tickets because the carriers actually paid 10 percent commissions to their "partners in travel," the producers of 85 percent of their ticket sales.

But then the travel world as clients and agents knew it changed forever in 1994 when the major airlines determined to rearrange their relationship with travel agencies. In a sudden and dramatic move, the carriers imposed on travel agencies fixed-dollar caps not to exceed $50 per ticket on even the highest priced air itineraries.

The trend escalated in 1997 when agency air commissions were cut to 8 percent, a 20 percent drop in revenues overnight. Since traditional agencies earned their income almost exclusively through supplier commissions of 10 percent to 15 percent, and largely from airline ticket sales, these draconian reductions caused their earnings in many instances to drop below the hard costs of doing business. Even slim profits were relegated to memories.

FINAL BLOW CAME IN '02

Many agencies stopped selling air tickets entirely and specialized in cruises and tours exclusively where they would still be paid commissions and could offer their services free of charge to clients.

The carriers' promotion of the Internet as a vehicle for selling directly to passengers escalated in the late 1990s. Today, every domestic and most international airlines have a Web site where they promote special Internet-only fares to their customers. Online sales were negligible in the early years but now represent a substantial and ever-increasing portion of airline revenues.

In 2002, the carriers severed their final pretense of partnership with agencies by instituting a zero commission policy. As a result of the airlines' actions, hundreds of travel agencies were forced to close up shop across the nation, most of them long-established, small mom-and-pop businesses that were fixtures of their communities. With this alarming occurrence, one can understand that service fees appear to be salvation for full-service travel agencies in the 21st century.

FEES, SERVICES VARY

Agency fees, according to a survey by the American Society of Travel Agents, may be calculated as a flat charge to cover labor and overhead for a specific transaction, as a percentage of the total cost, or may be charged as an hourly fee for professional services. The survey revealed the most common charges involved air transactions — for ticketing, handling coupons and special promotions, refunds or exchanges, and cancellations. Most of these bear a median charge of $25, as do car-only and hotel-only reservations, rail tickets, document delivery and long-distance communication costs. Thirty dollars is reported as the median fee applied to lost-ticket applications, visa/passport handling and to special accounting and reporting requirements of business clients. Higher fees, up to $500, in the form of a deposit credited against the final package cost may be imposed for time-consuming personal research and custom itinerary arrangements.

Here in Hawai'i, where "consumers will chase a nickel down the street," according to one prominent O'ahu agent, fees are often limited to airline transactions. A local agency will charge, typically, from $25 to $50 for issuing an air ticket and between $15 and $30 for a reissue, depending on the time or difficulty involved.

THEIR KNOWLEDGE HELPS

The question is are you willing to pay a travel agency directly for its expertise, informed recommendations and TLC? Actually, the question should be can you afford not to? Do you trust the Internet or individual airlines to look after your best interests, to assist when Murphy's law prevails during your travels? Be aware that you've actually been paying agents all along: the commissions they earned from travel suppliers were built into the price of the products and services you bought. To date, with rare exceptions, the consumer price tag for air tickets, cruises, hotels, car rentals, tour packages, etc., is still the same to you whether or not an agency is involved in the booking.

When airlines reduced, then eliminated agency commissions, they kept the profit windfall for themselves and did not lower airfares to the flying public. As a consequence, the travel industry has been atwitter with continuing speculation that other suppliers, such as cruise lines and tour operators, will eventually join ranks with air carriers in an attempt to bypass their traditional distribution system — the agents — in favor of direct sales. Obviously, such a move would impose serious consequences on the consumer and further threaten the viability of the nation's retail travel agencies.

So why should you be willing to pay a fee, however modest, to purchase travel components that you could possibly obtain from the supplier or through the Internet? Quite simply, a competent, experienced travel agent is as valuable as a trusted physician and lawyer. A top agent is a professional with indispensable knowledge and skills who can help you make savvy decisions and save you time and money in organizing your travel arrangements. You pay a fee for specialized service and advice that is available nowhere else.

Unlike a travel supplier with a specific product to promote, travel agents are charged to conduct business in the best interests of their clients. From among dozens of different offerings, they can steer you toward a cheap consolidator airfare, recommend a hotel that suits your needs, advise on the smartest auto rental deal and match you to the most appropriate cruise ship or tour program.

Obtaining informed, unbiased opinions is unlikely from a supplier or from commercial sites on the Internet. Securing the best choice and top value, which is often not the lowest price, for your travel purchases is what you should expect at a minimum from your personal agent. This accomplishment is certainly worthy of compensation commensurate with professional services rendered.

Irene Croft Jr. of Kailua, Kona, is a travel writer and 40-year veteran globetrotter. Her column is published in this section every other week.