Agents Offer E-Tix Incentives

Negotiating opportunities on two fronts could change the minds of travel managers who have thus far not supported e-ticketing.

Some travel agencies are offering incentives to corporate travel managers to push electronic ticketing by lowering the fees charged for e-ticket transactions, reflecting the potential savings in agency labor and delivery costs.

Airlines, too, might soon cast away their reluctance to negotiate discounts for electronic tickets as the carriers get a better idea of how much they're saving.

"We are not offering additional discounts now for e-tickets, but we absolutely plan to do that as we get a better handle on the savings," said Dave Hilfman, staff vice president of national sales for Continental Airlines. "It will definitely be a point of discussion as we enter 1997."

Clearly, corporate use of e-ticketing is important to airlines. A source at one major airline said that while there are currently no e-ticket deals, one of his accounts "would not have received the discount they got were it not for the fact that they are pushing ticketless travel."

According to a source close to United Airlines, a proposal to give extra discounts to companies that push e-ticketing is now under consideration, although no deals are in place. "E-ticketing is not yet universal," said Joe Laughlin, United's director of business markets. "Therefore, no cost savings are currently being realized." Meanwhile, in Germany, Lufthansa next year will virtually require e-ticketing for domestic corporate accounts.

While the airlines are just on the cusp of talking with corporate accounts about e-ticket discounts, many travel agencies are out in front. "Negotiating lower transaction fees seems to be the way it's shaking out so far," said Ed Adams, president of Denver-based Professional Travel.

Lower agency fees reflect savings on labor and delivery costs, running as little as a dollar or two to more than $10 per transaction, depending on ticket processing practices and travel patterns.

"If our corporate accounts can push e-ticketing, that reduces line-item costs for STPs and delivery," said John Smith, vice president of Tower Travel Management in Oakbrook Terrace, Ill. "We have at least four or five accounts that take advantage of e-tickets and save the $2 to $6 it costs just to deliver a ticket."

Many agents are still unsure of how much can be saved, and a handful believe e-tickets are actually more costly. Most of those agencies are in areas where e-ticketing and ticketless travel have not proliferated. West of the Rockies, for example, far more travelers are using it than throughout the Midwest, Southeast and Northeast, meaning that few of the nation's companies have reached a critical mass on usage levels (<I>BTN</I>, Oct. 28).

One of Professional Travel's accounts, Englewood, Colo.-based telecommunications and cable firm USWest, is promoting e-ticketing internally and now issues electronic tickets on 68 percent its transactions-both domestic and international, although it is not yet available internationally. While USWest has a rebate contract with Professional Travel, the two are talking about a move to transaction fees with the idea of charging less for e-tickets.

"We're watching very closely their costs and expenses associated with our account," said USWest travel manager Nancy Rowley. "We've moved a lot of business to e-tickets, and that has reduced some of their delivery and other line item costs. So I would be expecting two fees, one for regular tickets and one for e-tickets."

Rowley couldn't say how much lower the fees would be, but in general, e-tickets probably could cut 3 to 4 percent off a transaction fee, Adams said.

Although that's only a few dollars per transaction, for a company like USWest, which has a total air volume of $32 million and issues 68,000 tickets a year, that's not an insignificant number. But it's still not a huge savings, considering the potential for other new industry tools such as electronic booking and expense products.

Andrew McGraw, vice president of sales and marketing for Travel One, agreed that the savings aren't enormous yet, but he did say they are worth consideration. "A transaction includes an average of four calls per reservation-you haven't taken that out." But delivery costs are the big line item, and those typically run from $5 to $8. "The company is the direct beneficiary of cutting out those costs," McGraw said.

"You can take it down to the amount of time spent on a ticket," said Bob Grant, who runs both the travel management department and the in-house travel agency at Charles Schwab. "It's about 6 1/2 minutes for a simple reservation, and then 12 minutes at a minimum just to process the ticket. With an electronic or ticketless transaction, you save that 12 minutes."

Ollie Brilhante, senior supplier manager for Pacific Bell in San Ramon, Calif., already has a lower transaction fee for electronic tickets and ticketless travel with his agency, Business Travel Management in Danville, Calif. But the agency is now considering upping that fee.

"Initially for the agency it would be less work," said Brilhante, who would not say how much lower the fee is but said 60 percent of his transactions are ticketless. "But they've had to spend time chasing invoices and faxing confirmations, and they want to increase the fee to justify those costs."

Frankie Ross, president of Business Travel Management, said ticketless travel, offered by Southwest and other smaller airlines, is more costly for the agent than e-ticketing offered by the larger network carriers because documentation is not available in CRSs or ARC.

But in another way, Southwest's ticketless travel product is more forward-looking precisely because it removes CRS and ARC costs-that is, if the airline is willing to share that savings.

"The true savings from e-ticketing depends on the platform on which it's used," Hilfman said. "Obviously, there are additional savings to be gained by using products that can reduce CRS and ARC fees."

As for what the airlines might do in the future to try to get those companies not using e-tickets to embrace them, some suggest that once e-ticket interlining services take hold, carriers could begin levying a surcharge for regular tickets-in essence, a forced discount for e-tickets.