Air Canada's E-Agency Sees Roster Grow

Just as one airline-owned online agency, Orbitz For Business, presses its wares in the south, the north side of America's border with Canada finds an Air Canada subsidiary that claims 1,000 midmarket accounts little more than one year after stating its business travel intentions. Destina.ca, officials said, now is one of Canada's top 50 travel agencies.

Like other companies of its ilk, Destina is heavily marketing claims that it charges lower fees and offers lower fares than traditional travel management companies, particularly when travelers make their own reservations online.

The amounts of Destina's booking fees depend on whether it has a preferred relationship with the booked supplier, including but not limited to a commission arrangement. Destina vice president of business development and partner relationships Anthony Doyle said self-bookings made on preferred vendors do not require a fee, whereas nonpreferred self-bookings are C$15 (US$11). Doyle estimated that clients would experience a "blended average" of C$4 (US$3). Traditional agency fees in Canada run to about C$51 (US$38), Doyle said, which is about what Destina charges for telephone reservations.

Since clients with annual travel and entertainment expenses of C$500,000 (US$373,100)—the target market—do not normally obtain their own supplier discounts, Doyle said, "one objective is to use Destina's buying power to leverage offers that normally are brought forth in the form of quarterly offerings to the users. We will negotiate Destina corporate rates, as well as, for example, discounts for parking at major airports."

"They are beginning to talk to small and midsize corporations, which is a good move," said Toronto-based AIM International consultant Sam Andraos. "Small and midmarket companies make up most of all Canadian corporations, so why not fill this need? The majority of travel agencies do not bring enough value to corporations for an average transaction fee of C$45 (US$34) or higher."

One of Destina's most unique sales tools is the all-powerful loyalty program, which the company is using to a greater degree than its American colleagues. "Destina has a relationship with Aeroplan, the frequent flyer program of Air Canada, and users are rewarded for every purchase made on the site, regardless of the supplier," Doyle explained. "It builds the commitment of the frequent traveler, and we also reward the administrator."

The Destina For Business service offers on-demand online summary reports of air, car and hotel usage, as well as charge card reconciliation.

At a time when Canada is considering global distribution system deregulation along the lines of the Unites States' plan, display bias is a concern for buyers. Doyle said Destina lists inventory by price or schedule, depending on the customer's request. Some preferred suppliers participate in banner ads or buttons, while a growing Canadian upstart, WestJet, does not provide its inventory at all to Destina. "Back in September, WestJet chose to withdraw from the Destina Web site," Doyle said. "It was a commercial decision on their part, not that we had some sort of problem. They did not want to be sold on a company affiliated with Air Canada."

Despite the ownership position, Doyle said Air Canada views its relationship with Destina in the same fashion as it does any travel management company: "It's an arm's length relationship," he said, noting that Destina handles all of its own sales.

The two-year-old company has a wholly owned call center in Montreal and outsources some late-night calls to WNS Global Services, an Indian business process outsourcing firm part-owned by British Airways. Doyle said incoming calls from business clients take precedence over those from vacationers.

Asked about customers larger than Destina's target market, Doyle said, "There has been interest. The issue is that once an account requires a managed travel experience, we believe there is a different product available to them even from our own GDS provider." Destina.ca is backed by the Sabre global distribution system.