Buried in MSNBC’s article about today’s cut of travel agent commissions by American and Continental is the following quote: “An official with one of the largest corporate travel management firms accused airlines of seeking an unfair hidden price advantage over travel agents.” Am I missing something, or does the word “unfair” not really fit here? Of course the airlines should have a price advantage over travel agents — they’re selling their own freakin’ product!

Generally, a producer can sell its own product cheaper than a reseller can; that’s why resellers usually have to add value, and hope that consumers recognize the added value (in the case of travel agents, examples would be more thorough fare searches or entire-trip planning) and are willing to pay for it. Travel agencies are understandably worried, though; with the disappearance of the commissions, and the ease with which people can plan every aspect of their own trips online, the ways in which agents can add value are shrinking.


As a travel agent though why should I work for the airlines free? I deal with people everyday who think that our services should be free but how am I suppose to keep my company running if that is the case. I am not saying that airlines should not be able to offer a better price for thier own product but why should I sell that product for them if I am not going to be properly compisated for my time and effort. After all travel agents put 70-80% of the money in thier pockets. And as a consumer why should I have to pay more to deal with a travel agent who does the work for me because the airlines have to make cut backs? In the long run this is only going to hurt the consumer. Have you ever tried to get through to an airline on the phone???

• Posted by: brandie on Mar 26, 2002, 2:43 PM

Brandie, while I feel for you, nobody is forcing you to sell their product; you’re choosing to do so on your own, and as such, you have to come up with a business model that works for you. If that business model is adding a service that people find worth paying for, so be it; if people can get the exact same thing from the airlines directly, then so be that.

As a consumer, you should have to pay more because you’re demanding a higher level of service than the service provider themselves are providing. If I want to take what the airlines are offering, then I can pay their price; if I want something more, then I should pay more for it.

When push comes to shove, my argument is that you — travel agents — can compensate yourselves perfectly for your work by charging for it. But if you are complaining that doing so makes your offering more expensive than the airlines, well, of course it does, you’re offering more service. People either will pay for it or they won’t, and that’ll determine the success of your business model.

(This is beginning to sound like the start of the dot com rush, when businesses felt that they should be allowed to exist because they did something good, cool, whatever, without realizing that the business model didn’t take into account the actual reality of the marketplace.)

• Posted by: Jason Levine on Mar 26, 2002, 3:42 PM
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