Mergers and consolidations
Despite the European Commission blocking Airtours’ attempt to purchase First Choice, our panel felt sure that consolidation will continue.
Dhamija said the market was mature and now everyone is looking to save costs while Winrow said many mid-sized companies were looking to sell out.
Tracy added:”Like other industries, there is a move for consolidation. But that does not necessarily mean there will be barriers to entry because with the Internet there are lots of opportunities. It’s cheap to get on.”
Some felt that big brands, like Marks and Spencer or Tesco, might get involved in the sale of travel.
“People will buy into big brands on the Internet,” argued Tamblyn. “What’s stopping Marks and Spencer from buying a specialist company and putting it on the Net?”
But Winrow was more sceptical:”If Marks and Spencer could make money out of travel, they would have done it by now. Look at WH Smith – it failed to make bookstores sell travel.”
Commission charges and service fees
Winrow has already started charging some clients service fees and believes this trend will grow. Currently he charges a service fees on some products where commission has been reduced – thereby getting the double hit of a commission and a charge from the client. But he believes that currently the trade can still have a huge impact on sales and have the power to demand commission.
“Who would have believed 12 months ago that the trade could have the impact on British Airways’ and Thomson’s business that it has had?,” said Winrow.
“BA thought it could give the trade 7% commission and push a lot of bookings direct and 12 months later it is having to court the agent. Thomson has also suffered from independents turning their back on them,” he added.
“In the future we’ll have a mix of commission and service fees. I went to a seminar on service fees and then decided to charge fees and we’ve only lost two clients, who to be honest, were a bit of a pain anyway.”
On the subject of low-cost airlines, our panel felt they would have an important role to play in the future but, as the recent collapse of Debonair proved, only the fittest will survive.
“I love low-cost airlines, they give consumers a much cheaper option,” said Dhamija. “But I hate competing against them.”
Dhamija: “I would say to agents, go European rather than sticking with one market. I would maybe invest in call centres in Europe and use that buying power to negotiate better marketing deals. Service will be 24 hours a day, seven days a week. And what about adding something like financial services? Agents are already selling travel insurance, so why not home insurance and motor insurance?”
Tamblyn: “People have got to be better trained and more professional. We’ll also have flexibility in the working pattern and more home-working.”
Karim: “I agree there needs to be more training and more support for the industry.”
Winrow: “Airlines should give a decent commission, but service fees will become more prevalent because you can’t survive without them. Airlines must improve their service, at the moment they are very nine to five.”
Tracy: “With business travel we’ll be an advisory service and one of the things we might be doing is advising people when not to travel. Video conferencing will mean it’s not always necessary to go away. Of course, we will charge for that advisory service.”