Taking travel back to the future
THE pandemic has changed many aspects of life for people. Some of us have reported feeling traumatised by incessant lockdowns, more fearful of crowded spaces and showing more concern for the cleanliness of the places we visit. While it’s too early to predict how long the nasty imprint of COVID will last on the souls of humans, what is clear is that at least in the short-term future, there will be changes in the way many people do business, and the travel sector is no exception. ADAM BISHOP investigates.
The travel sector has in no way escaped upheaval from the pandemic, in fact, some argue it has been at the coalface of the COVID-related turbulence, with the movement of people brought to a virtual standstill. But with travel finally starting to ramp up again and vaccination rates in many parts of the world inching us closer to herd immunity, the question of how the sector will evolve as a consequence of the prolonged shutdown looms large in the minds of people left to pick up the pieces from the once-in-a-century health disaster.
For travel agents in particular, the impact of COVID was both immediate and disastrous. Many worked around the clock to deliver refunds for scuttled travel plans, often dipping into their own cash reserves to look after clients while money was tied up downstream with suppliers. And while there was much written by experts during the last two years about the apocalyptic future of advisors, the weeping and gnashing of teeth has started to subside in the face of a resurgent traveller-need for expertise, as restrictions start to roll back in a complicated and piecemeal fashion.
The evolving situation represents a big opportunity for agents to make up ground, TravelManagers Chairman Barry Mayo believes, with travellers now more acutely aware of how plans can go wrong when they decide to plan trips off their own bat.
“A consequence of the pandemic is that there is a much greater awareness among many travellers of the importance of having a travel expert working behind the scenes to ensure that their travel arrangements are well thought out and will run smoothly, and that they will have all the support they need if things do go wrong,” Mayo said, adding that clients will be really looking to agents for their knowledge on each country’s health requirements to provide them with confidence in their ability to travel safely.
“With constantly moving goalposts, clients will want to be reassured that they are ahead of the game and won’t face any nasty surprises along the way – this can provide a real point-of-difference with OTAs and booking directly with airlines online,” Mayo added.
The view is similar at Flight Centre, which has spent the last couple of months talking up the need for travel experts in the dynamic COVID environment overseas — particularly through its newly-created “There’s nowhere we haven’t been tagline”.
“Travel agents need to be across a lot more information about health requirements in the post-COVID era of travel, different countries are issuing ever-changing rules about such things as vaccine certification, PCR testing, and mandatory health insurance, making travel planning a minefield for people to navigate,” the company’s General Manager Kelly Spencer explains.
“That is why having a travel agent by their side has become so important, we’ve made it a priority to become experts in this stuff and go to great lengths to stay up-to-date so we can decipher it all for our customers.”
Spencer also points out that this need for advice is starting to have an impact in the all-important millennial demographic, a segment that has historically opted to organise travel online without the help of an agent.
Meanwhile most suppliers are also predicting that travel agents will play an increasingly important role in the rebuild of the travel industry as a whole, with the Council of Australian Tour Operators (CATO) suggesting advisors will possess a “stronger drive” now more than ever to demonstrate their expertise with clients.
“The role of travel agents will be key to suppliers rebuilding following the pandemic as an important channel to ensure travellers are well informed about the health, safety and entry processes for each country visited. Consumers will rely heavily on travel agents for this information and travel agents will lean on suppliers for the most up-to-date and relevant details in this everchanging landscape,” CATO told travelBulletin.
“As the pandemic has evolved and many travellers have been impacted by COVID, there has been an evident shift in travel agents ensuring they are fully abreast of their suppliers’ terms and conditions, should travel be disrupted. Suppliers vary with how they do business, and hence travel agents are now being more mindful of who they work with. The pandemic has set operators apart, determining which ones have a strong trade focus and trade ethics to those who are consumer-driven. This is a key change which has shifted who travel agents choose to support and why,” the group added.
APT Travel Group is at least one operator which agrees with this sentiment, moving forward its business model to align even closer to the trade following the fallout of COVID, labelling its relationship to advisors as “critically important” in its quest to rebound from the pandemic.
“Combining our resourcing and expertise is the only way to service our valued guests and we expect travel agents will be in high demand and appreciate the new complexity to consulting, so we are focussed on providing the support required to position our partners as experts,” the company’s General Manager of Sales Scott Ellis said.
Navigating the requirements of travel in this new world is more difficult than ever for consumers, making the role of the travel agent more vital than ever.”Whilst the core of our partnership and sales strategy will be focussed on driving new business through agents’ doors, we also need to focus on converting the enquiry. In-store, virtual and our suite of pre-recorded content are focussed on providing agents with the knowledge required to convert all enquiries. We are proud to have maintained a 20-strong sales team who are all ecstatic to be aligning with our key partners driving sales,” Ellis added.
While the demand for agent expertise in the post-COVID era looks to be showing strong life signs, the picture is far more mixed when it comes to the relationship between airlines and the trade, especially after Qantas announced back in May that it would be reducing base commissions on international flights sold in Australia from 5% to just 1% commencing July 2022. Labelled by AFTA at the time as “very disappointing” and “another unwelcome blow” to local travel agents already suffering under the weight of the travel shutdown, the move caused a great deal of consternation in the agent community, with many expressing concern the decision would set a precedent for other airlines to follow suit and reduce valuable revenue streams. Seen by many industry observers as an attempt to cajole the industry to migrate from a commission model to a service fee operation, the Qantas decision was followed by a similar reduction in commission structure by American Airlines only a month later. While some have characterised Qantas as kicking agents while they’re down, others like Flight Centre have taken a more philosophical view, with CEO Graham Skroo Turner previously espousing confidence that ultimately the market would decide, and if agents are offering value, they will continue to get a slice of the margin.
TravelManagers’ Barry Mayo is one travel leader who also remains fairly unperturbed by the prospect of airline commissions dropping, stating agents would “remain a great asset” for airlines in the future.
“Individual airlines will make decisions that are unique to their business circumstances, their service offering and the effectiveness of their distribution and it is too early to suggest all airlines will follow suit,” Mayo said.
“We are not expecting a material difference in the way agents and airlines work together post pandemic. Agents will be looking to airlines to provide clear information on COVID safe protocols and requirements, while airlines will be looking to agents to be advocates of their products and COVID safe travel,” he added.
Meanwhile Cathay Pacific explained to travelBulletin that it is somewhat agnostic to the argument of selling tickets through agents or direct, because they both represent valuable sales channels.
“We believe travel agents will continue to play an important role as airlines and consumers navigate the new travel landscape following the pandemic,” the carrier noted.
“The priority for airlines and travel agents alike will be how we can best serve the consumer moving forward. From Cathay’s perspective, it is important that our customers have easy access to our product via whichever channel best suits their needs, for some that may be via their travel agent, for others that may be direct.”
When quizzed about agent commissions specifically, Cathay said it remained open and flexible to arrangement that generated value for both the airline and its network of resellers.
“We are committed to creating strong partnerships that benefit both parties. The challenge, as with any negotiation, is to understand the commercial drivers for each party and identify how best to work together to achieve mutual success,” the airline said.
“Reducing cost is just one part of the equation, collaboration is equally as critical to help the industry recover quickly. We do not see that collaboration diminishing…significant effort goes into understanding what customers want and ensuring we are able to deliver. To that point, the best incentive is repeat business. I believe those businesses which place customer satisfaction at the centre of all they do, will win, irrespective of incentives or commissions.”