OP-ED: For Travel Agents: A 'Trussed' Issue

<B> OP-ED: For Travel Agents: A 'Trussed' Issue</B>

By Jack Alexander

<i>Jack Alexander is CEO of top-ten travel management company WorldTravel Partners, based in Atlanta.</i>

Over the holidays, I took out time to read the comics. On Thanksgiving, Snoopy was lying on top of his doghouse considering his lot in life, and he thought, "At least I'm not a turkey!" Since the 1997 commission cuts, I have spent some time reflecting over this cartoon. Here are some of my thoughts on our lot in life as we enter 1998.

<B>Airline Distribution Changes</B>

The airlines certainly appear to be hitting the mother lode with low fuel prices, increasing stock prices and multiples, along with decreasing distribution costs. I think we should salute the airlines for running good businesses. As we grew up, each of our mothers should have told us to never get involved in a capital intensive and service intensive business. Well, the airlines are walking that very tight rope and making it work. I am glad to see their businesses healthy--earning margins that reflect the risks they take and the heavy infrastructure they must carry.

As they admire their financials, I hope that the airlines also are keeping an eye on their customers. While service, in most cases, has seen marked improvement, customers continue to gripe about high fares and complex fare structures.

I compare airline pricing/yield management to the IRS tax code. Based on what I hear and read, it's only going to get worse. Bob Crandall had the courage to try to simplify things, but other carriers did not support this goal. Will the airlines be willing to draw any lines in their march to maximize the return on every seat?

My fear is that in the new age of efficiency, technology, high loads and increasing yields, the airlines won't have a conscience. Yes, distribution needs to be more efficient and cost effective. The airlines need to think about what type of distribution network they want 10 years from now. The approach they take today and the policies they establish will set the stage for something they may not like years from now. Do they want the "Three Wagons"? Or do they want healthy distributors that make reasonable margins as well?

<B>The Travel Agent's Role</B>

To the traveler, travel agents now look like the turkey. We have been the "tax accountants" trying to decipher the woefully complex code to the customer. We also have been like good shock absorbers on a bumpy road. When people change their tickets four times and then cancel the trip, we absorb the costs. During fare wars, we reissue tickets at lower prices to serve the customer and manage whatever promotion the airlines come up with. If the road gets bumpier, it's not time to dismantle the shock absorbers. Once they are gone, it won't be easy to recreate them.

It appears that the travel agent's lot in life is going to get worse before it gets better. The market thinks that we have been paid too much--largely because we haven't adequately demonstrated our value to our airline partners or to our customers. The airlines no longer need a "rebate buffer" to avoid corporate discounting that is commonplace today. And travelers can easily book themselves through online options or directly with the carriers.

Every distributor or middleman has the burden to show the market why it is special and why it adds value. Federal Express, for example, takes a drab brown package and lovingly applies its label. The label is loaded with value, giving the package new meaning. It will get there on time. If problems are encountered, the package will be tracked and handled effectively. For FedEx, the going wasn't always easy. It risked millions on Zap Mail and failed. But it trudged on and created a computerized tracking device that is a model for competitors and others.

FedEx makes bold promises to its customers and delivers on them. It represents something tangible and the market knows it. What do agents represent? In today's market it's not enough to merely add $30-45 to the cost of a ticket--using someone else's equipment and database to book someone else's airline.

For a few years, I've hoped for an "orderly transition to the new market." These times are anything but orderly. My hope is that the suppliers will use their new wealth to forge new partnerships based on value and respecting a shock absorber system that has served them well for years. Whether we call ourselves travel agents, travel management firms or distribution agents, we all need to remember the customer is master of the house. Furthermore, the airline-agency dependency is over. We can't count on having everything given to us. To compete, we must do what we do better, cheaper and faster and prove it every day to our customers and industry partners. Or else, we may end up on the Thanksgiving table.