Commissionless Travel: A Kick In The Right Direction

<B>Commissionless Travel: A Kick In The Right Direction</B>

In business, asking for a kickback to award a contract is patently immoral and, last time I checked, illegal. In the travel business this has been the norm all along. Corporate travel purchasers found a travel agency's "free" service too expensive. They wanted to get a cut of the action, a revenue share. Agencies, therefore, had to ask for overrides to make up for this and, sure enough, corporate travel purchasers then insisted on a cut. Airlines eventually decided that this was extortion on a massive scale, especially when the corporate buyer demanded discounts in addition to this blatant kickback.

With commissions disappearing, a whole breed of parasites and co-dependents is going to disappear. I have no qualms in saying the following: Anyone who loses their job as a result of these cuts had it coming, and the result will be good business.

The parasites are, of course, corporate travel purchasers who justified their poorly respected jobs because they made more money for the CFO than they cost. The co-dependents are the clueless travel agencies who bought accounts on the basis of absurd contracts that guaranteed them a margin lesser than a street vendor selling hot dogs.

The new paradigm is that corporate buyers now want agencies to justify their fees and even have demanded to look at agencies' books to see if they're justified. Corporations do not dare ask their financial or business consultants, for example, Deloitte & Touche or PricewaterhouseCoopers, to justify the multi-hundred-dollar-an-hour fee they charge, nor do they ask their law firms to justify 25-cent-a-page photocopying charges. And if the clients asked them for a look at the books, they'd be told where they can go.

Corporations also reckon they can reinvent the wheel and bypass the airlines CRSs, be their own agencies, do their own reporting, etc., and do it for a cost less than an agency fee of maybe $25-$45 per ticket.

All I can say is, go ahead. You'd be taking on non-core business obligations, paying higher salaries to the "re-branded" employees who used to be "free" travel agents, ARC specialists, etc., and drain your own IT resources--even with technology that less than a quarter of your employees will ever want to use.

The losers--besides the corporate traveler, who will get worse services and fewer choices--are the managers and owners of agencies. These are the same folks who tolerated the extortion and disdain of corporate buyers for years, and who have been slow as molasses to react to the Internet and commission caps.

Five years on, 90 percent of agents still are without Internet access at their desktops and most large agencies still are blowing air about their technology plans. They throw in an "e-this" and "@-that" for credibility--while producing little but re-branded Sabre- or Worldspan- or Galileo-produced software--or act as "intermediaries" for third parties, saying, "We have no clue. We'll have the Sabre folks call you and work it out."

Some agencies will survive because they serve niche markets, others because they have well targeted programs serving broad markets in ways other agencies don't or can't. The rest were essentially cranking out tickets like burgers and generating canned reports written by their MIS vendors--canned travel service.

In the end, lots of travelers are going to be losers--everyone will pay more for less, managers in the travel field with no other experience will be downgraded to clerical jobs or selling paper clips. And the airlines? They're laughing all the way to the bank. Count on net-net going bye-bye when it's all said and done.

<I>Alex Torralbas
Former Travel Agent
New York, N.Y.