This Week's Herman Trend Alert

HR in Normal 2.0

  The Herman Trend Alert

May 1, 2002

Airlines in a Quandary

The airlines in the United States have traditionally paid a commission to travel agents for selling their services and providing the ticketing for customers to fly on their planes. Professional travel agents have provided the important services of itinerary design, explanations, consideration of alternative routes, and other time-consuming tasks for their customers. Valuable relationships have been built over many years. The commissions paid by airlines neutralized the need for travel agents to charge for these services.

Now the airlines have changed their policy. No more commissions will be paid to the thousands of independent travel agents who have served their customers so well. The airlines want to keep the profit, through their reservation centers (telephone) and web sites (electronic). This shift is controversial, and airlines around the world are watching to see if they should follow this new design.

How is it working? Travel agents report an increase in business! And customers seem willing to pay a fee for assistance from these professionals they trust. Customers tell tales of long waits to talk with reservations agents who seem more interested in closing the deal and moving on to the next customer. The same relationship isn't there, and the airline employees usually can't answer the extra questions for concerned travelers. All they know is the flight information.

Travel agents report that their business travelers have not switched over to the Internet reservation systems. Unlike our upcoming Millennial generation that loves technology, many business customers don't want to take time to navigate through the airline websites and they are concerned that they may not be getting the best schedule.

Random calls to airline employees working in the reservation centers revealed a sense of overload. There's just too much call volume to handle well. Customers are upset and workers are pushed toward burn-out. What's the answer? Hire more airline employees to answer the calls? Heavy costs have already caused massive airline layoffs. Longer waits antagonize customers even more.

We forecast that airlines will realize they've bitten off more than they can chew. Commissions to travel agents are a cheaper and more effective alternative.

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