A return to the commission model for agents selling flights is not the solution to the woes of the contemporary retail travel agent.
Travel agents are slowly adapting to the fragmented travel booking ecosystem created by the variety of booking tools used to buy a more diverse set of ancillary products.
They also want airlines to pay them commission on the ancillary products they sell to clients, according to new research from IATA and Atmosphere Research Group.
The NDC: Travel Agencies’ Enabler to Success report indicates that 70 percent of retail leisure agencies, and 63 percent of travel management companies, want airline-paid commissions to compensate them for selling ancillaries (NDC is an acronym for New Distribution Capability). An airline-paid transaction fee was the next most popular compensation option.
“Agents believe they should share in the additional revenue they will help airlines earn, so it’s understandable why the prefer airlines be the parties to compensate them to sell ancillaries,” reads the report. “Airlines that decide not to compensate agencies for NDC-enabled transactions owe agencies clear, rational, and intelligent explanations for those decisions as well. The one thing airlines can’t do is ignore this topic.”
The report polled 1,034 travel agency executives in the U.S., Brazil, Australia, Canada and other countries. Two-thirds of respondents are from the U.S. or Brazil.
Research found that airline sales represent 56.4 percent of annual agency sales/turnover for travel management companies and 33.4 percent for retail leisure agencies. Agencies at large have yet to embrace selling branded fares or fare families, but those that do book across a variety of channels.
Agencies overall book 26 percent of air reservations outside the global distribution systems on average. Ultra low cost carriers that avoid the global distribution system, and airlines which contribute to the high volume.
They also consider themselves at a severe disadvantage compared to airline websites. Forty-one percent of travel management companies and 38 percent of retail leisure agencies said they are extremely disadvantaged when it comes to selling ancillary products compared to airline booking sites.
The key hang up for travel agencies seems to be educating individual agents on the flexibility that NDC implementation could bring to the booking process.
“All NDC providers, including global distribution systems, airlines and mid- and back-office software firms, will need to educate their agency partners about their plans for NDC-enabled transactions and process,” says the report. “Many travel agencies, especially retail agencies are unfamiliar with NDC. In this vacuum of knowledge, many ideas, right, wrong and possibly even amusingly outlandish, may be circulating.”
Agents who are actually educated on the ramifications of NDC on the travel selling process said easy access to all relevant fares and products, using a single screen for all products and a quicker transaction process are key benefits for agent efficiency.
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Photo credit: Terminal 1 at Frankfurt Airport. Allan / Flickr