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Travel Agents Withstand Internet Challenge - 2002-04-05

Because it provides direct links between consumers and businesses, the Internet was expected to put many salespeople and other intermediaries out of business. But that has not happened.

More than any other profession, travel agents were expected to go the way of the Dodo, the bird species that was too heavy to fly and therefore became extinct.

After all, if you could search the Internet for travel options and book your own reservations why would you pay a travel agent to do it for you?

Then, as if the Internet was not threatening enough, says Richard Copeland, President of the American Travel Agents Association, in 1995 the airlines began cutting travel agents' commissions. "But here is the interesting statistic: On February 9, 1995 travel agents sold 75-percent of all airline tickets in the United States, $70 billion [worth]," he says. "Seven-years later, with zero commissions, travel agents still sell 70-percent of all the airline tickets, $90 billion a year!"

What happened, Richard Copeland says, is travel agents created an alternate source of profits. They turned to consolidators, wholesale agencies that buy huge blocks of tickets from airlines at discount prices.

Mike Greenwald of Personalized Travel in Washington, DC says such wholesalers have increased both his commission and the discount he can offer clients. "I wrote a ticket to Mobutu in southern Africa," he says. "The published fare was $2,900. By going to a wholesale agency, I was able to sell the ticket to my client for approximately $1,940, which gave them a significant savings and gave me a significantly higher income."

And as for the Internet, Mike Greenwald says, instead losing business travel agents have figured out how to use it to their advantage. "We have our own web site, and the Internet brings people to us because of our specialties. I am a specialist with the Australian Tourist commission, so if someone types in "Australia," my name pops up, and they contact me," he says.

Travel Agent Association President Richard Copeland says for many consumers, the Internet offers too much information. "They come away with what we call "information overload, and they go to a travel agent to help them make choices and to get what we call collaborative verification, "Is that really a deal (bargain) that I am seeing?"

Never underestimate the power of a new technology, like the Internet, Mr. Copeland says. But at the same time, never underestimate the ability of a business to adjust.