For someone who watched her business’s largest revenue stream dry up almost overnight, Maryann Sasso, president of Pearson Travel in Providence, exudes a curious demeanor: one of liberation.
"The comforting thing is that the airlines can’t hurt us anymore," Sasso said, referring to the decision in March by the country’s major carriers to cease paying commissions to travel agents. "Before we were always waiting for the other shoe to drop. Now all of a sudden we know exactly what our operational fees are, and we’re no longer dependent on the airlines."
Pearson Travel is one of many travel agencies in Rhode Island and nationally that is trying to completely retool its business model after a gut-wrenching year.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
Travel agents already had fought through a string of commission cuts by the airlines, which dropped from 10 percent only a few years ago to 5 percent last August. Just weeks later, the travel industry ground to a halt after the Sept. 11 terrorist attacks.
But when Delta Airlines on March 14 moved to eliminate travel-agent commissions altogether – with nearly all carriers following in lockstep – the U.S. travel- agent community watched its already cracking foundation crumble into dust. Airline commissions for most agencies accounted for 50 to 70 percent of revenues.
The decision struck a hard, potentially permanent blow. Many agencies have laid off staff. Hundreds applied for economic-disaster loans from the U.S. Small Business Administration following Sept. 11. Dozens of agencies – mostly mom-and-pop shops – shuttered operations, according to the American Society of Travel Agencies.
The ones that survive are no longer waiting for the other shoe to drop. Instead, many are busy trying to reverse the perception that they exist solely as a ticket broker, insisting they provide a professional service that is worth the price of the escalating service fees now being charged by virtually all agencies.
"I foresee that, if travel professionals don’t start thinking differently about their business, they won’t survive," said Grace Neri, who has owned Ocean State Travel in Providence for about 25 years. "We are professionals, we know what we’re doing, and now the time has come for clients to pay for those services."
In a response echoed by many agents, Neri has reacted to the jolt from the airline industry with equal parts bitterness and resolve, declaring: "I am not going to have the airlines take away my business. The agency is not just based on selling tickets."
Neri also expresses a small sense of relief that travel agents will now be recognized – and paid – for their expertise in finding travel experiences that suit clients’ needs, the connections they have with vendors and their ability to put out fires.
She recounted the experience of one traveler who booked an overseas flight online. The Internet service he used failed to make it apparent that the client had to switch airports on a layover in London.
"Who do you go to with that problem?" Neri asked. She helped him cancel the Internet reservation and booked the trip through her agency.
Sasso said a customer recently purchased a ticket through Priceline.com, and then got bumped off the flight because he wasn’t in the gate area 30 minutes prior to departure. No other airline would accept his ticket.
She says it’s just one example of why it’s worth using an agent.
"You have to be worth the fees that you charge," said Sasso, who declined to specify Pearson’s service fees. "When you pay a fee to an agent, you know that you’ll have the support and the reputation of that agency in case something goes wrong." The agency maintains a 24-hour emergency line to allow clients to rebook reservations in case of emergencies or if itineraries change.
Howard Reynolds, owner of Boulevard International Travel in Pawtucket, said using a good travel agent means the client has somebody watching out for his or her best interests.
"When’s the last time the airline called you back and said your fare went down and you’ve got a $200 credit?" Reynolds asked.
For the most part, travel agencies will be forced to rely on service fees – and customer loyalty – to survive in the post-commission age. So how are the new strategies working?
Agents say it’s too early to tell, and most are loathe to discuss how they’re doing financially.
Reynolds of Boulevard International Travel said that most clients have had no problem with the increased service charges, which now are $30 per adult airline booking. But he acknowledged that the problem isn’t with his existing clients – they already know the value of having a good travel agent.
"The problem is getting that across to the people who aren’t using any agency at all," Reynolds said.
