In their obsession with low cost airlines, travel agents could risk losing sight of the big picture which could threaten their future.

If I were a travel agent, I guess I'd be pretty worried about the advent of the low cost airlines in Asia.

Their low fares and Internet strategy leave no room for doubt that low cost airlines do not see a role for the middleman in their stripped-down business model.

Which is why if you attend any travel agent conferences these days in Asia, the hottest topic of discussion is always the impact of low cost airlines on travel agencies.

It reminds me of the early days of the Internet when the hottest topic was the impact of online distribution on travel agencies.

Well, that came and went and the smart travel agencies adapted their business models and took advantage of the Internet to add value to their business.

Will the same happen with low cost airlines?
Probably. Every business has to undergo change and low cost airlines will yet force another dimension of change on the travel agency world. The smart ones will again adapt to take advantage of the new environment.

My fear is travel agents will become so obsessed with these new low cost players in the immediate term that they will lose sight of the bigger picture that will affect their future.

If we are to take lessons from the Internet bubble which we all got caught up with, then we must realise that this low cost phenomenon is just one of the many issues that will engulf the entire travel industry and, with it, the travel agency community.

At the recent Hong Kong Association of Travel Agents (HATA) annual convention in Hanoi, themed "Surviving in a new low cost environment", Cheong Tack Hoong, managing director of safe2travel, Singapore, hit the nail on the head when he said the change was sweeping wider areas. He cited two other trends – airlines and hotels going direct and new Internet players coming into the market.

The change is unstoppable, he said. "Everybody else in the value chain has changed and agencies are not appreciating the new landscape."
To survive, agencies too have to become low cost and look at ways to remove as much costs as possible from their business model, just like the low cost airlines have done.

He said travel agencies were in crisis because they had not developed an alternative stream of income to replace the fast drying airline commission, indeed since Singapore Airlines introduced zero commission in 1999.

Stephen Wong, passenger sales manager, Hong Kong, of Cathay Pacific could only give scant consolation to the agents.

Airlines themselves are under pressure to cut costs, he said, to compete with the new players and they too were watching the low cost entrants with great interest.

The only spot of good news came from Anthony Venus of Marketshare, Singapore, which has just completed a survey on the impact of low cost airlines on the Hong Kong traveler.

His survey showed that Hong Kong consumers were, in general, satisfied with their travel agents and were not showing much interest in booking online – at the moment.

However when asked if they could only get low fares online, would they then book online, the majority said yes.

So the tide could turn too in Hong Kong, as it has done in Singapore with more consumers now more willing to book online.

As a traveler myself, I know I want to book online. But I am frequently frustrated in my attempts to do so.

Most of the travel websites available now in Asia make it too hard to book online. I am usually then forced to go to my travel agent because I am more time-starved than I am cash-starved (for now).

And this is where I think travel agents can make the difference to their customers. They save us time which, in the end, translates to money. And if they can work on their service and knowledge levels to earn our trust and confidence, then surely that's something way beyond what any low cost or Internet player can offer.

The personal touch is something people are still prepared to pay for. Hotels knows that. Airlines know that. It is time travel agents know it, and do something about it.




The SHY Report
A regular column on news, trends and issues in the hospitality industry by one of Asia's most respected travel editors and commentators, Yeoh Siew Hoon.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her company's mission is "Content, Communication, Connection". She is a writer, speaker, facilitator, trainer and events producer. She is also an author, having published "Around Asia In 1 Hr: Tales of Condoms, Chillies & Curries". Her motto is ‘free to do, and be'.
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