Now that airlines are making money again, they're fighting for business from corporate travel agents.
It was a strange sight to see at the American Society of Travel Agents’ Global Convention last week: top sales executives from the major three U.S. airlines took the stage to praise travel agents.
Commission cuts by the airlines upended the travel agency business in the mid-1990s, and all airlines eliminated commissions in the U.S. by the early 2000s. There’s still bad blood between many leisure travel agents and the airlines.
So why were airline executives on hand after more than a decade away from the travel agency community’s big annual conference?
Corporate business is huge for airlines, and travel managers control which airlines their clients fly.
“[Agents] still generate a very significant amount of United’s revenue, and frankly our highest margin business is handled through the [travel management company] community,” said Dave Hilfman, vice president of global sales for United.
Now that the airlines have consolidated and reinvested in their fleets, they’re looking to reconnect with travel agents.
“Shame on us for being absent from this conference for so long,” said Bob Somers, vice president of global sales for Delta Air Lines. “The importance of travel agencies has never been lost on us.”
In fact, airlines still need travel agents to act as their de-facto unpaid sales force– especially in the world of corporate travel.
The presence of representatives from the big three airlines was fitting considering the major drama of the week for the airlines: Lufthansa’s booking surcharge, meant to move bookings away from travel agents toward direct channels.
“More of our business comes to us through travel agencies than any other channel,” said Somers. “We cannot replicate what you do nor do we have any desire to to that; we’re here to help you whether it be in a managed world… or also agencies that just need our help.”
Travel agents are worried about a future where airlines levy punitive fees against agency bookings, in order to drive more valuable direct bookings. But as global passenger demand continues to rise, the airlines still need travel agents.
Photo credit: United aircraft at Newark Liberty International Airport. BlueRidgeKitties / Flickr