Lets get rid of the middlemen

Everytime airline industry gets into a problem, it seems that the problem is the travel agents and the commission that they receive. Somehow the whole industry seems to feel that the cause of all their problems are travel agents. The commission given to the travel agents increases the cost of the ticket which results in increasing the cost of travel which in turn reduces the demand and causes severe problems for the airline industry. I am guessing this is the logic behind the thinking of airlines.

I do sincerely hope that the airline industry does not sincerely believe this. Also, if airlines believe that the travel agent gets to keep the full commission, they are living in fool’s paradise. The reality is that travel agents are operating in a very competitive environment. There are thousands of travel agents willing to cut each others throat which keeps their commission at the lowest level. The service that they provide is absolutely necessary, maybe not for all travellers but certainly for a majority of them. I am remember that when my wife was travelling to Australia recently, she had to ring up the travel agent a number of times for assistance. I don’t think the airlines can provide such service.

Now I can understand that dealing with customers one-on-one has become easier with the help of Internet but this channel is not a replacement for all other channels of distribution. People fail to understand that Internet offers another option as a channel of distribution to tap the Internet savvy customer. I do not think that airlines should get rid of travel agents.

In case some airlines do, then this channel can be used by one of the airlines to position itself in the market place as the only airline which works through travel agents as well as the Internet. I think that whichever airline adopts this strategy will be able to capture a decent chunk of the market share. Imagine thousands of travel agents recommending only one airline. It would certainly boost up the business.

I hope some airline is thinking the way I am thinking.

In any case, such a strategy is myopic. Even in the newspaper business, Times of India has tried to by-pass the advertising agencies which I believe is the biggest mistake they will make.

Avinash narula

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Comments

Hi1

It seems that travel agents are thinking in the same manner as I am. They are planning to retaliate against airlines which stop giving them commission by labelling such airlines as “least preferred,” that is, they will book tickets in such airlines only when no other option is available. Kingfisher, Jet and Indian Airlines are planning to scrap the travel agents commission from October 1, 2008.

I still feel that this offers an opportunity to some airlines to stick with the travel agents who will be highly motivated to promote such airlines.

Lets see what happens.

avinash narula

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