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Mon 7 Apr 2008 04:00 AM

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Agents face worst financial woes in 2008

Travel agents region-wide face a barrage of obstacles hampering the progress and need to improve.

It seems that travel agents region-wide will be forced to further improve their game in 2008 as a barrage of obstacles appear to be hampering their progress at present.

In fact, the ATN news desk has been inundated with emails and calls regarding potential threats to the survival of travel agencies this month, proving that there's no time like the present to re-think your agency's strategy for the future.

The main threats appear to be coming from the airlines - no surprises there - with agent representative bodies such as the Dubai Travel Agents and Tour Group (DTTAG) taking issue with several of their practices.

Firstly, it's become very noticeable that airlines are using direct-sell tactics more than ever. By that I mean cutting out the middle man - the travel agent - and marketing offers direct to the consumer.

Now, there is nothing wrong with that when the rates offered to the consumer are the same as those offered to the agent. However, in some cases, the rates are lower, effectively undercutting the agent and in addition, bonus frequent flyer miles are offered to the consumer for booking direct.

This means that travel agents are disadvantaged when all they ask for is to be on a level playing field.

Most airlines will argue that they offer the same rates to agents that they do online, but there is evidence to suggest otherwise - one of the UAE's two carriers, for example, was found to be offering a web rate for a premium seat that was one-third of the price offered on the GDS.

We all accept that travel suppliers, whether airlines, hotels, car rental or other ancillary products need to use every distribution channel available to them, but they should not forget the importance of the travel agent.

IATA recently stated that 75% of all airline sales worldwide are channeled through agents making them a force to be reckoned with.

But that does not mean the agent should be complacent. Airline commissions are diminishing as we speak, with Qatar Airways poised to go to zero in the UAE in the next few months.

Other travel agent payments are also declining - just recently Gulf Air axed incentive payments to agents in many GCC countries, including Bahrain, claiming that this type of remuneration was not working.

There are many other threats - the abolition of SSIs later this year, making it compulsory for IATA agencies to pay the IATA bank guarantee fee for each and every one of its branches; the increase in the number of airlines forcing non-IATA agencies to pay bank guarantees; and in Dubai, the introduction of a new by-law that will see agents forking out AED 200,000 (US $54,000) for every travel and tourism activity in which they are involved.

The time is ripe to look ahead and work out what your agency does well and to capitalise on those strengths.

Specialising in niche areas, providing exemplary customer service, investing in technology and training and ensuring you offer your clients the products and services they can't find online or at another agency is now essential to survival.

I wish you luck!

Gemma Greenwood is the editor of Arabian Travel News.

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CT 11 years ago

The role of a travel agent has changed with the advent of internet and online bookings, but most travel agents have not changed with the times. If they saved me time when making travel arrangements, I would use them - but when I have to spend as much time telling them what I want, following up, collecting /paying for tickets etc, why shouldn't I book it all online from home! Grow up, offer a service that is actually required, and yes, we will use travel agents! if they live on airline commissions alone, they don't deserve to be called travel agents.