Are Travel Agents Becoming Extinct?

By: David J. Wardell


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© 2002 By: David J. Wardell.  Reproduction or redistribution in any form without written permission is strictly prohibited.


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.

 

 

 

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Revised: Wednesday, February 22, 2012 07:41:50 PM