Steve Tracas, president and CEO of Vacation.com, said United Airlines' new credit card policy has the potential to weaken the agency distribution channel. “The proposed changes by United Airlines has ramifications well beyond distribution fee savings, as it rearranges the credit system as we know it today to the detriment of the consumer and travel agent,” Tracas told Travel Agent.
“In addition to the airlines, other industry sectors including cruise lines, tour operators and GDS suppliers depend on a strong and vibrant distribution channel to support their products," Vaction.com said in a statement. "United’s proposal only shift costs from one entity to another in the supply chain by shifting significant costs and risk to the travel agent, potentially weakening the very distribution channel cruise lines and tour operators depend upon.”
“Ultimately, incremental cost incurred from this program will be passed along to the consumers in a time when economics are a key factor in the decision to travel," Tracas said. "This move certainly would not be a positive for the travel agency community and the traveling public at a time the industry is already challenged.
"One of the unfortunate consequences of the airline industry moving away from the agency channel is that they have a limited ability to actually ‘sell’ their products," Tracas continued. "Their major outlet for sales are on-line or via a kiosk [which is] not a very compelling way to extol the benefits of 'buying-up' to more leg room, frequent flier benefits, or an upgrade. The cruise lines, tour operators and international carriers still use the Vacation.com network as intended. To ‘sell’ their products and to generate incremental revenue."
Tracas cited a PhoCusWright study, saying that “the travel agent channel offers a significantly higher average transaction value than online channels.’ ”