How travel agents will survive internet

By SIMON HENDERY and CHRIS DANIELS

Traditional airlines and travel agencies should survive the tide of nuts-and-cola airfares booked over the internet, say international aviation experts who met in Queenstown this week.

The Queenstown symposium, entitled "Changing airlines in pursuit of value", was co-hosted by Air New Zealand and Ohio State University, which has organised nine previous industry think-fests.

Among the speakers was David Radcliffe, chief executive of international corporate travel agency Business Travel International.

While the emergence of budget airlines has been seen as posing a threat to the livelihood of travel agencies, Radcliffe said smart agencies were adapting to the change.

Air New Zealand scrapped agent fees when it created its domestic "Express" service last year, a move which caused an outcry among agents.

But Radcliffe said that, internationally, corporate travel agencies had moved away from their previous reliance on commission payments.

"Our income comes from the client to manage the expenditure in the round - frequently booking low-cost carriers is our job, but equally it is our job to recognise when it is low cost and when it is low value," he said.

"We are now very frequently an outsourced function which clients use to save them money, not just a ticketing procedure."

The symposium's keynote speaker, Professor Nawal Taneja of Ohio State's engineering and aviation department, said airlines turning to the budget model needed to make comprehensive structural changes to their businesses.

Reaping the benefits of a budget operation involved more than just dropping meal services from flights, he said. Airlines needed to reassess the types of aircraft they flew and how they issued tickets.

"The key phrases are 'aligning your costs to revenue' and 'aligning your capacity to demand'.

"Those airlines that have not been able to do that are the ones that are suffering right now."

Manufacturer Airbus's vice-president for forecasting and strategic planning, Adam Brown, said despite the severe knocks it had taken since the September 11 terror attacks of 2001 the long-term outlook for the aviation industry was positive.

Airlines were turning to China and India, he said. Both countries offered huge potential market growth as air travel became more affordable.