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New Year Will Present Tough Challenges

December 12, 2012 By: George Dooley Travel Agent

signBrace yourself. If the pundits, commentators and forecaster’s are even half right 2013 will be a tough year.

Aside from the uncertainties of federal tax and regulatory policies and the impact of Obamacare on business, there are a host of travel industry specific issues that bear watching.

Among the top issues is the Department of Transportation’s (DOT) long-awaited policy on airline ancillary fees – a DOT Notice of Proposed Rulemaking (NPR) has been due for months – which will be a major industry wide issue in 2013. 

But there are many other sources of controversy to be faced in the year ahead that will challenge the travel industry and its often-beleaguered associations.

Independent contractors, for example, may face tougher scrutiny from the Internal Revenue Service and the American Society of Travel Agents (ASTA) has cautioned that new rules could affect thousands of IC’s and the companies that use them.

The role of technology - notably the International Air Transport Association’s (IATA) New Distribution Capability - is another area of potential conflict with airlines, agents and global distribution systems fighting it out.

If cuts in government spending materialize it could also impact demand for meetings and conventions and in turn destinations such as Las Vegas. On the other hand, government spending on infrastructure – roads, highways and possibly airports may be beneficial.

With many states and cities seeking new revenue sources, the temptation to tax the travel industry - including hotels - is a real challenge and one that worries the Travel Technology Association. Travel Tech has successfully fought back many punitive or unworkable tax schemes in the past.

Also on the tax front are international plans such as the European Union's attempts to tax airlines and passengers for environmental reasons. While Congress has fought back the tax – exempting U.S. airlines from paying – the legislation is still alive in the EU. Another example is the widely opposed UK Passenger Duty tax.

Congress will remain divided and clashes over the Federal Aviation Administration (FAA) budget and funding for other agencies such as the Transportation Security Administration (TSA) are a certainty.

Airline mergers and consolidation – notably the fate of American Airlines as it emerges from bankruptcy - will be an issue, as will international airline alliances. A key question: Can U.S. carriers compete in a global market?

The U.S. airlines, led by Airlines for America (A4A), are clear on what they want, including solutions to problems that impede the industry from competing globally, such as high taxes, excessive regulation, infrastructure challenges and volatile fuel prices. 

Another issue of concern to ASTA and travel agents is the DOT’s Insecticide, Hazardous Materials Disclosure Requirements that could require U.S. travel agents to “refer” ticket purchasers to the DOT insecticide website when selling travel to some countries.

ASTA – and much of the industry - supports “Trusted Traveler” programs including the TSA’s “PreCheck” program at domestic airports and Customs and Border Protection’s (CBP) “Global Entry” program for U.S. citizen returning from abroad.

Relations with airline owned ARC are much better now than in prior years but bears watching.

In the past year, the U.S. Travel Association has broken new ground in building the inbound travel market and increasing the economic benefits of international visitors to the U.S. 

Supported by ASTA and other groups such as the NTA (formerly the National Tour Association), Brand USA is a reality and inbound travel is a priority issue.

Policy toward travel to Cuba - supported by many, including the NTA - may also become an issue for agents, tour operators’ airlines and cruise lines.

ASTA has also worked to combat a host of state restrictions on travel including such arcane issue as travel insurance deregulation and occupancy taxes. Here ASTA’s Chapter leaders fulfill a vital task of alerting and opposing harmful proposals.

The American Hotel & Lodging Association (AH&LA) will oppose federal legislation that would prevent state and local governments from collecting room taxes from online third parties when hotel rooms are booked through their Websites. The Online Hotel Booking Tax
 (a.k.a., Hotel Occupancy Tax, or the "Internet Travel Tax Fairness Act") will reappear.

Changes in technology will impact the industry – witness the emergence off the iPhone, Droids and tablets – and spark clashes over what companies have access and market share. Google’s worldwide reach will be contested and the battle over online and offline agencies will continue. 

On the positive side, innovative technologies will also open new marketing opportunities while the effects of social media will continue to impact travel marketing for agents and suppliers – while raising potential new issues.

How will the industry respond to the issues of 2013?  Major issues driven agency trade groups such as ASTA and the Business Travel Coalition (BTC) will remain vital to protect and defend agent’s interests. 

Ad hoc coalitions can be expected to form and reform to address specific problems and often the issue driven groups will seek grassroots agent support. The Consumer Travel Alliance (CTA) can be expected to partner on issues impacting travel, as it has in the past.

While the role of the Congressional Travel and Tourism Caucus (CTTC) in the year ahead is unknown, one policy group to watch is ASTA’s Corporate Advisory Council (CAC). The CAC includes most of the major agency consortia and franchisers who can shape and react to policies impacting the industry.

The bottom line - stay tuned in for an exciting, challenging year.

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About the Author

George Dooley
George Dooley, Travel Agent’s senior contributing editor covering retail and technology, has a long-standing reputation as one of the top travel industry journalists. He notes...

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By George Dooley | December 12, 2012
In 2013, travel agents will have to contend with the DOT's long-awaited policy on ancillary fees, the impact of Obamacare and the fiscal cliff on business, conflicts over the New Distribution Capability and more. Here's a rundown on what's ahead.
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