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Leisure Travel and Airlines
By Mark Murphy
Published on: February 26, 2009
Back in 1995, when Delta Air Lines capped and then ultimately cut commissions, the carrier held to the belief that a monopoly on certain markets, such as Atlanta and Cincinnati, would insulate it from any potential backlash from the travel agents. This thought, coupled with the idea of the lucrative business traveler tied into their particular loyalty program, created a sense of security. Most other major airlines quickly followed.
We ultimately ended up at zero commissions for travel agents. This transferred the cost for distribution from the airline to the actual traveler, who pays a fee to have travel agents find the best fare, ticket it, and deal with the headaches of rebooking when many airlines cancel or delay flights.
Of course, things have changed dramatically for the airlines since then, and not for the better. They created what some in the industry have called a “phantom economy,” which is even more apropos today given the current economic crisis. That is to say, they envisioned cost savings that never truly materialized as the distribution costs in other areas skyrocketed.
How does this connect with the idea of leisure travel as mentioned in my headline? It’s there as a point of contrast to the airlines and their perceived monopoly in the market. Indeed, like most markets start-up companies come in to exploit the weaknesses of the larger players just as soon as they settle into their groove. We’ve seen that with the expansion of players like Southwest Airlines and others that have turned these supposed monopolies on their financial heads.
What’s different about the general leisure travel market is the abundance of choices that are available to the traveling public. Take the Caribbean. You can choose a cruise that will take you from island to island or pick from the many beautiful destinations and do a land-based stay. If you go the land route, however, there are many options to choose from. They run the gamut from all-inclusive to EP hotels, and span budget to luxury. You also have to factor in the many channels of distribution, including wholesalers, that are typically part of the equation for a destination like the Caribbean.
Of course, there are a tremendous number of options outside of the Caribbean that provide beautiful beaches and great getaways. They include Mexico, Hawaii, the South Pacific and more. And this doesn’t take into account all of the other leisure travel options that consumers have in front of them. Think about London city stays, museum tours in Paris, escorted tours, river cruises -- the list is literally endless and means that nobody has a lock on the leisure traveler, and I mean nobody. There are just too many options.
That’s why suppliers and destinations need to pay particular attention to the individual travel agents who have the ears of millions of travelers. The travel agency channel is literally where leverage and influence meet.
Fourteen years ago a handful of executives at the largest airlines created a seismic shift that has reinvented the travel agency channel. These airlines had the leverage back then to indiscriminately stick it to their travel “partners,” something we should be grateful for today as we view their ongoing woes.
The influence of agents on leisure travel choices has grown dramatically, as evidenced in the latest Yankelovich National Leisure Travel Monitor. With the myriad choices available to both travel agents and their customers this influence is being compounded daily. Those who rely on leisure travel and the whims of the ultimate consumer should take heed and see the agency distribution channel for its ability to deliver that customer to their door.
Mark Murphy
President & CEO
Performance Media Group, LLC
mmurphy@pmgemail.com
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