The business world post-9/11
is much the same as it was before, with the public’s sensibilities
certainly focused upon matters such as security that, quite frankly,
should have troubled them prior to 9/11 and that, regretfully, show few
signs of being adequately addressed anytime soon.The events of 9/11 did
not cause the economic recession, nor the excesses of the past several
years that lead up to it. 9/11 made the recession take hold faster and
brought about what, in many ways, was an irrational business reaction. The
result of this was that economic changes that might have taken a year were
compressed into a month or two.
The larger economic factors that were at work prior to 9/11 are still
active:
- Vendors are emboldened (through technology and other means) to
eliminate distributors and intermediaries of all descriptions, usually
with little consideration as to the true long-term effects of such
policies.
- Travel purchasers have adopted the seemingly permanent stance of
seeking the cheapest travel products and services available, without
regard for value or the suite of services they themselves consider
important.
- Travel vendors, especially airlines, are unable to reconcile their
economic profiles and abilities to deliver services with changes in what
customers truly want to buy.
- All participants in travel distribution, but particularly agents are
challenged to articulate their value to customers and, more
specifically, the value of the services they offer.
A NEW BUSINESS?
Many of the post-9/11 theoretical changes to the industry are not
changes at all, or find their origins elsewhere. Business travel is not
permanently depressed and has been recovering as businesses work through
their irrational reactions and as the broader economy recovers.
Business will likely not "recover" to the point that sustaining
irrational capacity or unsound business practices is possible. In that
sense, the wisdom of hindsight shows that the post-9/11 airline financial
recovery programs were probably unwise in the way they were implemented,
as they allowed some fundamental management problems to remain unresolved.
Video conferencing or some other techno-gadget will not take the place
of business travel. Not this year; not next year or the next. There is no
alternative to air transportation continuing to serve the general purpose
it has for the past 15-20 years.
The point is that the currently depressed travel market will recover,
but consistent with consumer demand (which is always evolving) and the
economic cycle. There is clearly no guarantee that the vendors upon which
travel agents depend will offer the right products in the right places.
Indeed, there is some indication that they will not. Public enthusiasm
for air travel will recover over time, but it would have done so more
quickly if airlines, for instance, paid more attention to the message the
public wants to hear.
A number of surveys on current traveler attitudes have shown that
people are more concerned about disruptions to the transportation system
that might strand them away from business and family than they are
specifically afraid of flying. This is a project that the industry as a
whole could attempt to address, but which seems to have attracted little
or no attention.
SECURITY: TODAY’S KEY BUSINESS ISSUE
Public attitudes as to airline security are a curious blend of cynicism
and rationalization. Most everyone knows (and has always known) that
airline security was and remains thoroughly inept, but travelers
rationalize that, for a variety of reasons, it doesn’t make a difference
"this time."
Most airlines, which are at the forefront of security issues, have
adopted a "minimum necessary compliance" posture to security issues and
appear thoroughly unwilling to make fundamental changes that would result
in meaningful improvements. Why airlines appear to have missed the
traveling public’s craving for action in this area is among the industry’s
most profound mysteries.
Regretfully, travel distribution also cannot look to government to set
either the direction or the cadence of security improvements that would
enhance public confidence. The Department of Transportation seems intent
upon abdicating its leadership responsibilities wherever possible.
What other explanation could there be for the irrational passenger
screen practices now in place at the nation’s airports? Since frequent
travelers quickly learned to predict what actions trigger heightened
scrutiny, can anyone truly the "bad guys" did not as well?
The attention paid to the elderly, passengers in wheelchairs, and other
potential "threats" at airport gates continually inspire cynical smirks,
while government appears unwilling to implement meaningful threat
assessments and the travel industry does not demand them.
One is left to wonder which government and industry will find more
painful: taking meaningful actions to improve security now, even though
they may be unpopular, or dealing with the potential financial and
political results of further terrorist outrages affecting transportation
and ongoing traveler unease.
BUSINESS AS USUAL
The recent final elimination of most base airline agency commissions is
the result of business policies airlines embraced years ago and should
have surprised no one. The fact that many failed to reconfigure their
businesses in anticipation is a planning and management failure, not an
indication of what the future of agency-based distribution might be.
Commission elimination is one (by no means the only) step in the
disintermediation process. Commissions took years to disappear because
dragging the process out allowed the illusion of cost-reduction progress
to be contrived for the financial community, but the final step is
coincidental to 9/11 and not driven by it.
The point has been made so often that it’s strange anyone has missed
it, but current disintermediation-driven travel distribution requires
that:
- Agents adopt a customer rather than a vendor-focused business
posture and financial model.
- Reliance upon single revenue sources and lines of business must be
reduced or eliminated.
- Creation of meaningful new products and services, driven by the
distributor and not the vendor, is key.
- Maintaining and enhancing the broadest possible customer
relationships is essential: no customer is expendable.
FUTURE OF AGENCIES
The post-9/11 world needs more, not less, of what agencies offer.
Contrary to popular belief, most customers recognize this. Many agencies
have failed in that they have not adapted to changing economic and
business realities, regardless of 9/11, and cannot articulate their value
effectively either to customers or vendors.
There will be fewer agencies in coming years because many remain unable
to adapt. The money may be harder to find, but the market potential and
customer need for effective travel distributors remains intact.