The Amazing Race 35, Episode 3

Nakhon Pathom (Thailand) - Bangkok (Thailand - Ho Chi Minh City (Vietnam) - Can Tho (Vietnam)

What happened to travel agencies?

At the start of this two-part episode of The Amazing Race, the pairs of cast members are told to go to a travel agency to book flights from Bangkok to Ho Chi Minh City.

Corey exclaims over how pleased he is that they are getting to “travel the old Amazing Race way where you actually get to book your own flights,” after several seasons when the cast and crew of the reality-TV show travelled by chartered plane. Two of those charter-flight seasons, The Amazing Race 33 and The Amazing Race 34, have been broadcast. A third was filmed before the season now being aired, but is apparently being held in reserve for broadcast next year or perhaps for eventual release through some alternate streaming or distribution channel.

In a taxi on the way to Suvarnabhumi Airport — the newer and larger of the two major airports serving Bangkok — Corey’s father and race partner, Rob, muses, “I’ve been thinking, when was the last time I booked through a travel agent? I think it was my honeymoon with your mom.”

Why don’t we go to a travel agency to buy airline tickets any more?

There are two obvious wrong answers to that question, both of which are what airlines want you to think, and a less obvious right answer that airlines don’t want you to realize.

Wrong answer #1: There are no more travel agencies.

A few giant online travel agencies have replaced many small — mostly very small — local travel agencies. There are far fewer travel agencies than there used to be, but that’s mostly due — as in so many other industries — to (a) a shift from brick-and-mortar to online sales of the same products and services, (b) consolidation, and (c) lack of enforcement of antitrust laws. None of those trends affect the viability of the travel agency concept, and rumors of the death of the travel agency are greatly exaggerated.

It’s at least as easy to find a travel agency today on the Internet as it used to be to find one on Main Street.

A travel agency, Expedia, is the lead sponsor of this season of The Amazing Race, with paid product placements in every episode of the TV show. Other online travel agency brands including Travelocity and Hotwire (both now brands of Expedia, although many people don’t realize that) and Booking.com are better known than any offline travel agency except American Express or Thomas Cook Travel ever was.

Wrong answer #2: The Internet has replaced the travel agency.

The fallacy underlying this statement, as with many other issues, is to see the Internet as a source of information rather than a medium of communications. On the Internet, you can communicate with many sources of information and e-commerce platforms, for airline tickets as for other goods and services. You can do the same thing through offline means of communications, including by phone or face-to-face over the counter.

Among the most important and, I believe, still relevant portions of my 2001 book The Practical Nomad Guide to the Online Travel Marketplace is the section on “How to evaluate Internet travel information”.

Before the Internet, you could go to an airline ticket office — either a “city ticket office” downtown or a ticket counter at the airport — to buy a ticket. Or you could go to a travel agency.

Today, on the Internet, you have exactly the same choices. The Internet hasn’t eliminated travel agencies or changed what options are available.

As discussed below, however, the Internet has enabled other changes that influence the reasons to choose to buy tickets directly from an airline or from a travel agency.

The right answer to the question, “Why don’t we go to a travel agency to buy airline tickets any more?” is that (a) airlines have deprived travel agencies of the information they would need (and used to be able to get) to advise us and assist us in comparison shopping for airline tickets, and (b) governments in the USA and other countries have allowed this to happen by failing to enforce longstanding consumer protection and airfare transparency laws that require common carriers to sell tickets only in accordance with published tariffs.

To understand that answer, let’s start with a different question: Why did travel agencies exist in the first place?

In the days before the Internet and electronic tickets, you went to a travel agency to pay for and receive a paper ticket. You could make a reservation by phone, but even if the airline was willing to process a credit card charge and send you a ticket without an in-person signature and an “imprint” of the credit card (most airlines weren’t, although a travel agency where you were a regular customer might have been), you’d have to pay for postage, wait for delivery, and risk having the ticket lost or stolen in the mail. Until ID checks were introduced for U.S. domestic flights in 1996 an airline ticket was, in effect, a bearer instrument, and a high-value one. It had a name on it, but anyone who got their hand on it could use it.

In this environment, airlines appointed travel agents to represent them and provide local points of sale for tickets in places where it wasn’t economical for each airline to maintain its own ticket office.

A 10% commission to a travel agent was much less than it would have cost an airline to maintain an office and staff in every town — an early example of outsourcing what had been a core business function to independent contractors paid on a piecework basis.

At first, travel agencies had to call each airline to make reservations and report ticket sales, even though agencies could issue tickets. “Making a booking” referred to having the airline write a passenger’s name in its reservation “book” (more often a file card) for each flight. But after computerizing their reservation card files into databases in the 1960s, airlines began giving travel agencies access to those internal systems in the 1970s. Allowing travel agencies to enter data directly into airline reservation records, and even paying for equipment to enable them to do so, was cheaper for airlines in labor costs and avoidance of telephone transcription errors than having to pay so many clerks to answer calls from travel agents to find out which flights had space available and take down reservation and ticket details.

Airlines paid to build the first national real-time e-commerce network, including paying for dedicated leased data communication lines, terminals, and even the first local-area networks in most towns in the offices of local travel agencies. These Computerized Reservation Systems (CRSs) or Global Distribution Systems (GDSs), originally developed by airlines and airline consortia, were eventually spun off. (Whether they should be paid by airlines, travel agencies, or both has been a point of contention ever since.)

Information about prices (“fares”) for airline tickets was originally distributed separately from reservation information, through printed “tariff” books. Airlines were (and on international routes to and from the U.S. still are) required to sell tickets only in accordance with published tariffs. So a clerk at an airline ticket office, or a travel agent, could make a reservation — by phone or through a CRS — and then calculate the fare to charge by consulting the tariff. But once travel agencies had real-time data connectivity to central databases “in the cloud”, CRSs began providing access to airline tariffs as well as schedules and availability of seats.

These changes in business processes and the CRS infrastructure and functionality to enable and support them were designed and largely paid for by airlines, to serve their own interests in automation to reduce labor and error costs. An unintended and, from airlines’ point of view, unwanted side effect, however, was that this made powerful and highly effective comparison shipping tools available to those travel agents who wanted and had the skills to use them to serve the interests of travellers rather than those of airlines.

Another unintended and, for airlines, unwanted side effect of the outsourcing of airline reservations to travel agencies was that travel agencies knew more about travellers, their preferences, and their purchasing patterns than did airlines. Decades before Salesforce.com, CRSs operated the first cloud-based software-as-a-service customer relationship management services through “customer profile” functions for their travel agency subscribers.

The easier it became for airlines to sell tickets directly, the less it was worth it to them to pay commissions or bear automation costs to enable remote sales by disloyal travel agencies that could use those same systems to assist travellers in comparison shopping. Once online booking and payment (first through EAAsy Sabbre via dial-up networks like Compuserve and later through Web sites and apps) and electronic tickets eliminated the need for physical points of sale, airlines came to see travel agencies as not merely unnecessary but hostile to their interests. Airlines largely eliminated standard commissions and began selling tickets directly at prices not listed in their published tariffs or in CRSs.

This latter practice was and is, at least for international tickets to or from the USA, flagrantly illegal. Federal law explicitly and unambiguously prohibits airlines from selling any tickets on such routes except in accordance with their published tariffs. But airlines haven’t let the law stand in the way of their efforts to deprive you of the comparison shopping help that travel agents used to be able to provide.

Officials at the U.S. Department of Transportation (DOT) who are supposed to enforce the tariff adherence and publication requirements have declined to so, motivated by a devout ideological commitment to deregulation and “free markets” and seduced by the myth that any enforcement of consumer protection law with respect to sales over the Internet would “stifle innovation”. How can you have a “free” market without price transparency? And haven’t we learned better than to allow e-commerce to remain a law-free zone? Unfortunately, the law does not appear to provide a private right of action for violations of this provision. (Someone please correct me if I’m wrong.)

Once upon a time, airlines and the DOT had a point that off-tariff ticket sales through travel agencies were a way to offer lower prices than international airline price-fixing treaties allowed airlines to publish or offer legally. But fares on all U.S. domestic and most international routes have been deregulated, so airlines can publish and legally and openly offer fares as low as they like.

Travel agencies can still pay for CRS connectivity, but CRSs no longer provide access to all fares available directly from the airlines, even for airlines that participate in those CRSs. And while there was a time when almost every significant airline in the world participated in the largest CRSs, many new airlines, especially those trying to minimize operating costs, don’t. Around the world, CRS connectivity has increasingly become a premium feature of higher-fare airlines serving a larger percentage of business travellers.

Today, no travel agency, offline or online, has information about every airline or all the prices for tickets offered by any airline, or has as much comparative information about airline ticket prices as used to be available to any CRS subscriber.

In the absence of a travel agent, there are some services available to individuals, for free or for a fee, that give access to aggregated information about airline routes, schedules, fares, and availability. I subscribe to FlightConnections.com (US$36 for the ad-free version, or free with ads) for information on which airlines fly which routes. It’s useful for direct flights, but not so much for connections, especially between distant points. I also subscribe to ExpertFlyer.com (US$99/year) for schedule, fare, and seat availability information. It too is useful, but relies on CRS data and thus omits non-CRS airlines and fares. For some airlines, it has only some fares (often not including the cheapest), or schedules but not fares or seat availability.

There are Web sites (misleadingly represented as “search engines”) that aggregate information about flights, fares, and availability. But none of them has information as comprehensive or accurate as used to be available to nay travel agent with access to one of the major CRSs.

Where does this leave us? We saw the consequences when the teams on The Amazing Race went to a travel agency in Bangkok.

There used to be only two airlines operating scheduled flights between Bangkok and Ho Chi Minh City, the national airlines of Thailand and Vietnam. Today there are seven. But to find out which ones had seats available, a travel agent can no longer, as they would once have been able to do, look up all those airlines’ schedules and availability of seats with a single line command on a CRS. Instead, the agent had to call each airline in turn, or look up availability on their separate Web sites or smartphone apps.

This is not progress, and it doesn’t have to be like this. This is a result of government policies that can and should change.