A Foregone Conclusion?

While bemoaning the plight of travel agencies, the National Commission to Ensure Consumer Information and Choice in the Airline Industry recommends neither new legislation nor regulations to reverse the trend toward industry consolidation.

By: Jerry Chandler

The travel agency community is in critical condition, and it took a federal panel $800,000 of your tax dollars and six months’ time to render the verdict.

In 1994, there were some 24,000 travel agencies in the United States. Since then, more than one-third of them have vanished.

“The state of the travel agency industry itself was pretty much a foregone conclusion,” said Ted Lawson, one of nine commissioners with the National Commission to Ensure Consumer Information and Choice in the Airline Industry. Lawson is with National Travel Service in Charleston, W.V.

What wasn’t a foregone conclusion was how the decimation of travel agency ranks has affected consumers. Agency advocates have argued that a healthy agency community is critical to consumer choice. But the commission determined, “The decline in travel agents did not have an adverse impact on consumers because the Internet gives them more access to travel information than ever before.”

While bemoaning the plight of travel agencies, the commission recommended neither new legislation nor regulations to reverse the trend toward industry consolidation.

“Rather than interfere with competition, we chose to allow market forces to drive the direction of travel distribution and not recommend measures to artificially protect one interest over another,” the panel concluded.

And so it is that the status remains virtually quo.

ARTA President John Hawks said he’s disappointed that the commission didn’t go far enough.

“From our end of the industry, the small retailers, there’s just not the lobbying effort out there,” Hawks said. “I’m not too surprised they didn’t come out more strongly [in favor of remedial regulation].”

Hawks said the commission was particularly soft when it came to Orbitz.

“It would have been great for them to come out and push the government to regulate Orbitz the same way CRSs are regulated.”

The commission did recommend, however, that the government immediately consider whether the Web site owned by five major U.S. airlines be allowed to maintain contract clauses that allegedly keep airlines from offering Web fares to other agents. These so-called “most-favored-nation” and marketing incentive clauses have been a prime target of agent ire.

Travel agent commissioner Lawson defended the commission’s position on Orbitz.

“Actually, I think we hit the issue right on the head,” he said. “Our opinion was that the most-favored-nation clause was troubling.”

Ann B. Mitchell, NCECIC commissioner and president of CWT/First College Park in Starkville, Miss, concurred: “To retain most-favored-nation status for Orbitz goes beyond what was considered to be a fair use of market power.”

While Mitchell (CTC & PhD) said the report would have been a bit different had she written it, she’s nonetheless proud of the commission’s efforts. She noted that commissioners served in a voluntary capacity, and the commission actually returned to the government $200,000 of the $1 million originally allocated.

Regarding the product’s substance, she said, “For it to represent nine people from different areas of the industry, it was a fair report.”

Overlooked in the criticism that the commission’s efforts weren’t far-reaching are a couple of seeds that conceivably could bear fruit. The commission recommended that:

" Agents should be protected from the arbitrary action of airlines in debit memo disputes. Amending and strengthening the Travel Agent Arbiter program should take care of this.

" The industry should provide travel agents a special box on tickets to include service fee charges.

Hawks is hopeful that travel agents and the Airlines Reporting Corp. can come together to beef up the arbiter program. To this end, ARTA recently called ARC’s general counsel.

“They just dropped the bomb on us regarding daily reporting,” Hawks said. “I’m posing it back to them to do something for us. It would be a huge help.”

In the end, will the NCECIC help beleaguered travel agents?

“What it’s really doing is putting travel agents’ desperation on the map,” said ASTA President Richard Copland, who’s confident that the detailed delineation of agents’ plight will do some good but not immediately. “You can’t expect things to be accomplished overnight. You have to remember, the government works slowly.”

For Hawks, the commission’s report serves to underscore the obvious but in a dramatic new way.

“Just seeing in cold, hard writing on federal stationary no less that one-third of agencies have closed since the mid-’90s,” he said, “brought home to me the agony of it all.”