Published on Wednesday, June 8, 2005

Agents still key say industry giants

A seminar headlined by the online giants of the travel industry at this week’s EyeForTravel summit, bucked the usual trend by outlining a promising outlook for travel agents.

 

British Airways head of global sales and distribution Tiffany Hall said the trade would still account for the majority of BA sales in the next few years.

 

Hall said that while BA enjoys considerable cost savings from selling its tickets online, it still receives only one in five bookings globally via ba.com.

 

“We cannot achieve the reach and volume or quality of yield we want through ba.com alone,” she said. “The majority of our business will still come through the trade in years to come.”

 

“Lots of people still want the added value and neutrality of going through an agent,” she said.

 

When questioned by debate moderator Paul Richer of Genesys, Hall said the term “trade” included online intermediaries as well as high-street agents and travel management companies. She later said she anticipated at least half of all sales coming through these channels for the foreseeable future.

 

Hall also outlined an opportunity in the growth of sales through online intermediaries such as those owned by Sabre, Cendant and IAC, which were all represented on the panel at the summit.

 

“The online players are providing us with volume and reaching customers who wouldn’t book through ba.com,” she said, but added: “Now we want to start getting intermediaries up-selling for us as well.”

 

Hall previously explained that ba.com is proving a valuable tool for up-selling, which is encouraging passengers to upgrade to a higher class of travel or spend a bit more on flights to travel at a more convenient time.  

 

Agreeing with Hall over the role of the trade was Sabre Travel Network senior vice president EMEA, Richard Adams. In his presentation, Adams said that the size of the global travel market in 2009 would approach $1 trillion, and that offline sales would continue to dominate online sales, taking as much as three quarters of the market share.

 

“This is surprising given how many headlines the online market grabs,” he said.

 

While online channels are experiencing the most growth, at 20%-30% per year, he said that online channels would only have a 9% market share by 2006.

 

Despite these comments from the panel, a survey of the audience taken at the start of the debate found that 78% of respondents thought suppliers would increasingly by-pass intermediaries to get bookings direct.

 

This is something that is being aggressively done by Intercontinental Hotels Group, by offering a best rate guarantee and cutting out some intermediaries, such as Expedia, altogether. European vice president global brand services, Peter Gowers said two thirds of the company’s bookings were taken direct, leaving little room for online intermediaries and agents to sell Intercontinental hotels.

 

He added that the hotel group, the world’s largest, was only interested in working with “big partners” willing to invest in the consumer experience.  

 

*Look out for more TravelMole reports from the EyeForTravel conference.

 

Report by Ginny McGrath

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  • The Agency - Airline Relationship

    The Asian region has seen a sudden spurt in the number of low cost/no-frills airlines - even traditional legacy carriers are looking to spin off low cost subsidiaries, seeking to bypass the agent and go directly to the passengers... Somehow the airlines have decided they can afford to ignore, or even eliminate, the travel agents in their effort to reduce distribution costs; they are ready to abandon a time-tested and manifestly cost-efficient distribution network that has served them well over the years. The PSA Agreement has been emasculated to the point where it is ludicrously one-sided; the 9% agency commission one based one’s business model on is a distant dream; airlines routinely undercut agent fares; AD tickets have stopped being an entitlement and are subject to the whims of the airlines who also issue ADMs with gay abandonment and the agent must lump it. It is up to us agents to take the initiative and evolve a new relationship since over 80% of airline sales are still routed through us.

    By Ajay Prakash, Friday, July 1, 2005

  • No commission to Agents from B.A.

    Where is the incentive for agents to book with BA if they are not going to receive any commission?

    By Richard Shipton, Tuesday, June 14, 2005

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