Travel agent booking fees

[Evan]

Out of curiosty how many agents had to dip into their own pockets because of the AN collapse.

From memory people who paid by credit card had it reversed and I would have thought that every other ticketholder was an unsecured creditor of AN.

However I would be interested to know what the enormous liability and risks they were exposed to were.

Tavel agents would also have insurance to cover this or else they would create there own insurance policy (it would still cost them some money regardless but not hopefully the whole lot)
A lot like workcover insurance and you also have the option to self insure.

At the end of the day i don't mind the booking fee's (provided they are reasonable), they do work for you you pay them, what i find difficult sometimes is to find somebody to be able to sell you what you want, even the large chain travel agents in Australia can have different flights that each other cannot book. (This supprised me a lot).

Evan

 

[GDSman]

Glad we're getting some spirited debate on this....

I don't think it would be appropriate of me to disclose all industry commissions, but suffice to say that domestic is 0 or 1%, international published ranges from 5% to 9% at point of sale and perhaps 1-2% in override based on volume of sales, international net is a markup of anything from 0 to $200 for a long-haul fare. Gross margins in travel are at around 11%. This does not compare favourably with the margins in most other retail industries. The industry is at a tipping point for a variety of reasons that will likely lead to the moniker 'agent' eventually being discarded in favour of 'retailer'. My point around human intervention was that price is channel oriented in every industry - buy stuff on the web and it may well be cheaper than going to a store.
I'll get to the AN saga tomorrow....

 

[crow]

I don't think it would be appropriate of me to disclose all industry commissions, but suffice to say that domestic is 0 or 1%, international published ranges from 5% to 9% at point of sale and perhaps 1-2% in override based on volume of sales, international net is a markup of anything from 0 to $200 for a long-haul fare. Gross margins in travel are at around 11%. This does not compare favourably with the margins in most other retail industries. The industry is at a tipping point for a variety of reasons that will likely lead to the moniker 'agent' eventually being discarded in favour of 'retailer'. My point around human intervention was that price is channel oriented in every industry - buy stuff on the web and it may well be cheaper than going to a store.

The inability to disclose all the industry commissions is exactly my point.

What about the % commission on travel insurance?

In my opinion the term agent is already a misnomer. Essentially they are retailers and as Evan suggested you can only buy some products from them depending on who they are aligned with and what they choose to sell.

However exactly what are agents selling? Their time or the travel products.

My query is how can you charge a customer a service fee for a service when you haven't disclosed to them the total fee you will receive from providing the service. It doesn't make sense to me.

At the moment the rationale for the current way agents operate appears to be that everybody does it because everybody can not because it is the best way or the fairest way. It appears that agents prefered commission only because they can hide behind the mystique of it all.

As airlines etc cut commissions the agents are charging customers to make up the shortfall but as before the customer doesn't know what he is paying for the service only that more is coming out of his pocket.

And yes I know the consumer doesn't know how much profit Coles makes on a packet of cornflakes but they don't make the profit on the product and then charge you a service fee at the checkout.

In the financial services industry all amounts earned by the selling agent / advisor must be disclosed before the transaction is entered into.

 

[garyjohn951]

I and my extended family have used the one TA for a number years. In the last few years they have set number of booking rates. As NM said, some itineraries can be complicated.
One I am having soon has been changed because one leg has now disappeared.
1. Phone call from TA saying Flight X no longer available. Now have to overnight in BKK. I wasn't satisfied with that so she said she would get back to me.
2. I went to Expert Flyer and she ran back later and we discussed changing legs to thru HKG, as only 3 stopover.
3. A couple of emails later and all changed.
The charge for all this work by her - in the original charge for the trip was her answer.

 

[crow]

I and my extended family have used the one TA for a number years. In the last few years they have set number of booking rates. As NM said, some itineraries can be complicated.
One I am having soon has been changed because one leg has now disappeared.
1. Phone call from TA saying Flight X no longer available. Now have to overnight in BKK. I wasn't satisfied with that so she said she would get back to me.
2. I went to Expert Flyer and she ran back later and we discussed changing legs to thru HKG, as only 3 stopover.
3. A couple of emails later and all changed.
The charge for all this work by her - in the original charge for the trip was her answer.

That sounds like good customer service which generates an ongoing gooswill and promotes the good relationship you have had over a period of time. It is good business. Charging $50 per person for the change or having you come back next time. It is a no brainer.

This is the response I got from the agent I used when I queried why the base airfare they quoted to me as the best available fare was more than was on the ticket

"Hi Crow,



I am writing in reference to your emails sent to Karen questioning an over payment for your flights.



I am sorry but all avenues with us cannot go any further as we are not in a position to refund your money. As far as your business with ##@$% #@$$ is concerned, we have quoted you an airfare, you have accepted this airfare and paid for it and consequently we have issued the airfares agreed by yourself.



Please also note within your enquiries, that on your e ticket receipt that was issued on the 12th of Jan, only $30.36 YQ Fuel and insurance surcharge was collected per ticket. Hence why we have been charged later by ticketing the additional fuel levy. Please see below table of fuel surcharges that should be collected. We should have collected $135.00 each direction, per person for your airfare quote. Therefore, when doing your sums, you would be aware this is much more than initially quoted. ##@@%$&$ will always, when putting quotes in writing guarantee and never ask for more money from clients with a consultant error.



The fare construction of your tickets has nothing to do with the additional collection of $138 as this is a fuel surcharge collection rather than a fare issue.



I am hoping that you will now understand more of ticket construction which to a consumer is normally irrelevant.



If you feel that you need to take this any further, then please do so through your own avenues.



Regards,



Georgie


and my response:

Hi Georgie,

Thanks for the information in your email but I have to tell you that you are incorrect.

The YQ Fuel surcharge included on that ticket is $330.36. ( The first 3 is on the line above straight after YC.)

View attachment 20070305174246.pdf



According to my calculations;

WG $ 3.00
WY $ 42.74
AY $ 3.30
US $ 39.20
XA $ 6.50
XY $ 9.10
YC $ 6.50
YQ $330.36
YR $ 12.00
XF $ 5.90

TOTAL $458.60 AS PER XT ON THE TICKET

As the taxes and charges on your quote were $489.35 and the taxes and charges on the ticket are $489.32 your claim that an additional fuel surcharge was required is incorrect.

 

[novacatz]

The thing I don't get about this discussion --

we all know that some real estate agents are good folks who maximise the value to their customer and sometimes they are scammers who just want to complete the sale... agents can sometimes be greaseballs.

This is not a big deal...

Why is all this discussion on travel agents like it is a big deal?

 

[crow]

The thing I don't get about this discussion --

we all know that some real estate agents are good folks who maximise the value to their customer and sometimes they are scammers who just want to complete the sale... agents can sometimes be greaseballs.

This is not a big deal...

Why is all this discussion on travel agents like it is a big deal?

Maybe it's a big deal to other people even if it is not a big deal to you.

Anyway what's wrong with a few challenges and healthy debate to the way things are to determine if there may be a better way in the future.

Perhaps we should just accept everything the way it is because that is the way it is done so that is the way it should be done.

 

[oz_mark]

Out of curiosty how many agents had to dip into their own pockets because of the AN collapse.

From memory people who paid by credit card had it reversed and I would have thought that every other ticketholder was an unsecured creditor of AN.

Have you ever noticed this little gem in the Flight Centre booking conditions.

Credit card surcharges may apply when paying by credit card. If for any reason any travel service provider is unable to provide the services for which you have contracted, your remedy lies against that provider, and not against Flight Centre Limited. In the event that payment has been made to Flight Centre Limited by credit card, you agree that you will not seek to charge back your payment to Flight Centre Limited.

 

[serfty]

... I am hoping that you will now understand more of ticket construction which to a consumer is normally irrelevant. ...

What this really means is that "as I can normally get away with b**ls**tting customers who are normally one-off anyway we will continue to maximize our income as much as possible".

 

[GDSman]

Certainly a tough crowd out there, and I acknowledge that some of that has obviously been created by agency practice and some by an inconsistent model.
The reason I dodn't feel I should disclose industry air commission levels is because it's not in the public domain (nor is it required to be) and I'm not a travel agent so may be better giving a range I'm sure of rather than trying to be a smartarse and getting it wrong.... While the focus of this debate is very much around air tickets the commercial reality for most agents is that air is typically viewed as a revenue-neutral hook to bring customers in to purchase higher-yielding products like insurance, hotels and cruise.
CROW said
"My query is how can you charge a customer a service fee for a service when you haven't disclosed to them the total fee you will receive from providing the service. It doesn't make sense to me."
There is no obligation on the industry to have transparent pricing. You might not like this but it's a reality. Coles do operate a comparable model of sorts because they charge a 'service fee' (being their markup on a product) and receive a 'commission' from the supplier (payments for shelf-space/positioning).

As for AN, yes agents were pursued by the credit card companies for charge-backs. Where the agent had acted as the merchant and issued the ticket as 'Cash' the money was still debited from their accounts by IATA and paid to the receivers. This is a common practice and many agents took a bath on AN. Hence Flight Centre's odd statement, but I would have to wonder whether it could stand up if tested..

I don't want to come over as an apologist for travel agents - there are undoubtedly good and bad operators. The commercial situation and market pressures will weed out many of the bad or incompetent - any company with an industry average of 2% net margin is always going to be under pressure. I do think that Travel agents are entitled to charge what they want and the market will then determine whether they survive or not. I would seriously caution against the assumption that online = cheaper/better though as this is only sometimes the case. Travel Agents provide a service that is invaluable to many people and a possibly less relevant to the better informed constituency of this discussion board. In the meantime I enjoy a bargain as much as the next person and am always looking at how to secure the best deals with the minimum associated fees......cheers

 

[crow]

There is no obligation on the industry to have transparent pricing. You might not like this but it's a reality.

Perhaps there should be an obligation.

Either be a retailer or charge fee for service. At the moment agents take the commission which is like the retailers profit and then charge a fee for service.
That is the best of both worlds.

Maybe one day it may be made to be transparent as happened with financial services.

As for Coles, the shelf positioning fees from suppliers lowers their effective purchase price so I don't think it is a valid comparison to a service fee charged to the end consumer. I think you are clutching at straws there.

 

[serfty]

I do travel a lot with an average of 85 flight segments and around 25 room nights per year for the last 10 years.

I don't decry Agents their fees. For goodness sake(, IIRC), it costs about $20k to set up an agency; and that does not include shop front expenditure. It's mainly registration and related costs.

I will use an agent if I can't get what I want through other means; However with diligent research, before and after I came across AFF (& FT) I have not used one since 2001.

As web based services improve, it is becoming far less likely that I will need to in the near future.

 

[Keith009]

I will use an agent if I can't get what I want through other means

Last year I was waitlisted on an M class fare on SQ. Whole plane was zeroed out from what I could see, let alone trying to secure an M class seat specifically. I had left my booking till late as I didn't realise it'd be that busy. The TA said not to worry and he'd 'sort it out.' 2 hours later I got an sms from said TA indicating that my WL has cleared.

So I believe there are still 'tricks of the trade' which gives going via TA an edge. But like serfty if I can get what I want without going through a TA I'd probably do that to avoid service fees and I've typically found rather competitive published fares vs what's offered at a TA anyway.

FYI my TA is pretty transparent about the service fee - it's listed as an item in its own right in the invoice. It's only charged on economy class fares as apparently they get cough all commissions on those fares.

 

[acampbel]

And to be fair, Crow, the reason that financial planners have to disclose ALL fees and commissions is because the dishonest behaviour of a few(?) was tainting the whole industry. They would basically promote products not on their merit but by how much commission they could get, and in many cases the punter would be left with a huge loss whilst the FP walked away with a healthy profit.

I'm not saying that travel agents don't try to maximise their profits, but anyone with half a clue about the industry will be able to detect when they are being screwed and will then take their business elsewhere. On a couple of occasions I have found a better deal than the agent has initially presented, but I would put that down to the time I had available to look at options outside the norm.

I have now been told that all business travel must be booked through Amex (and on my Amex) so lets see if my positive attitude about agents can survive this edict.


Cheers,

Andrew

.

 

[crow]

And to be fair, Crow, the reason that financial planners have to disclose ALL fees and commissions is because the dishonest behaviour of a few(?) was tainting the whole industry. They would basically promote products not on their merit but by how much commission they could get, and in many cases the punter would be left with a huge loss whilst the FP walked away with a healthy profit.
.

And this dishonest behaviour isn't happening in the travel industry?

Trust me it is as I have first hand experience. To what degree it is prevalent I don't know.

 

[acampbel]

And this dishonest behaviour isn't happening in the travel industry?

Trust me it is as I have first hand experience. To what degree it is prevalent I don't know.

Yes, but a travel agent isn't going to charge you for a First Class flight to Perth and then put you on a bus. And if a TA is able to get me from A to B on a better/cheaper flight than I could find, then I don't particularly care how much commission they are paid.


Cheers,

Andrew

.

 

[novacatz]

one thing about comparing with the financial industry -- it is difficult to evaluate the quality of the financial product/advice you get whereas you can work out pretty fast if you got a Y ticket from SYD-HKG on the right dates or not... that is why finance industry has much stronger controls.

K

 

[NM]

one thing about comparing with the financial industry -- it is difficult to evaluate the quality of the financial product/advice you get whereas you can work out pretty fast if you got a Y ticket from SYD-HKG on the right dates or not... that is why finance industry has much stronger controls.

K

One one bad TA transaction is unlikely to have long term financial devastation for anyone (no more than any single purchase/transaction can have).

 

[novacatz]

that's true too... also I think that sometimes it is only possible to evaluate the quality of advice wayyyyyyyy into the future (i.e. the fin planner gives you a 20 year plan -- hard to tell if it is good or not right now -- so hence interest in commissions right now).

 

[crow]

Yes, but a travel agent isn't going to charge you for a First Class flight to Perth and then put you on a bus. And if a TA is able to get me from A to B on a better/cheaper flight than I could find, then I don't particularly care how much commission they are paid.


Cheers,

Andrew

.

A TA may quote you an airfare above the actual airfare, ticket the airfare for the actual fare and keep the difference for themselves and pat themselves on the back and make the point to you that they are not charging you a service fee. Then when you query why the fare quoted and paid for was different to the ticket you are told about extra fuel charges and taxes that apply.
They then take the attitude that as you authorised the fare at the quoted price that is what you pay even if they ticket it cheaper because the quote was accidentally or purposely too high.

So you might make up extreme examples but there are plenty of examples where a TA can make plenty of extra $ from unsuspecting consumers without adequate disclosure requirements. Not by the extremes you have mentioned but by the same tactics.