Coping With Changing Trends

Delving into sub-agent operations and tracking recent changes among non-IATA agents, Susan George uncovers the latest trends in the sub-agent segment

The travel industry is constantly evolving. New destinations, revamped schemes, overnight mergers or airline launches - the industry is marked by regular transitions. Keeping track of the shifts in the industry is the travel agent. From new timetables for airlines to changing alliances and partnerships, travel agents are required to keep pace with the ever-evolving industry. Hand in hand, they mould their operations in keeping with changes in the industry. Sub-agents are an integral part of the travel business, and include those who have been in the industry even before IATA accreditation came into play. IATA was formed in 1919 essentially to act as a ‘responsive and forward-looking’ organisation to keep pace with what they describe as one of the ‘fastest-changing industries in the world’.

However, without a regulatory body like IATA, sub-agents have to contend with changing trends themselves. These agents sometimes find themselves swept by different currents in the industry, and have learned to cope and even conquer by adapting to the changing environment. When the travel industry is on a decline, they pump up their marketing efforts. When the city’s go dry, they garner clients from rural areas. When technology comes in, they replace outdated methods of operation.

What are some of the changes that this segment has adopted? How have sub-agents reacted to emerging industry norms? We discovered that non-IATA agents are thinking on their feet, quick to adopt new strategies, venturing into new territories.

Talking Technology

The influx of technology in any domain is inescapable. The travel industry is no exception. While several non-IATA agents operate out of one-room offices, oblivious to the world of technology, a significant number are nevertheless inviting new systems into their operations.

One of the important developments in the industry has been the introduction of the Central Reservation Systems (CRS) - traditionally considered a stronghold of IATA-accredited agencies - into sub-agents’ offices. While only IATA agents can book tickets using the system, sub-agents also have access to it, and can confirm reservations using the system. K Gunasekar from Four Seasons, a non-IATA travel agency, believes that with the implementation of CRS, the work of sub-agents is undoubtedly changing. "With the introduction of technology, especially CRS, the only difference between us and IATA agents is that we can’t issue tickets. All other services, including blocking tickets, providing the latest information on bookings and timings, are now well within our grasp," says Gunasekar.

One outcome of the increasing dependence on CRS and computer databases is the corresponding downsizing in terms of manpower. Says R Pandian from Charu Travels & Tours, "With everything going online, including things like hotel bookings, the need for human resources is likely to come down. At the same time, as the business picks up, the need for guides, tour managers, spot guides and so forth increases. They cannot be replaced by technology." He adds that while the CRS allows for operational ease and cell phones are convenient, they are unlikely to actually rake in business. "It all depends on the reputation that you’ve built up over the years," he contends.

John Angel from Vimy Travels has been in the business since the last 20 years. Operating independently as a sub-agent, he has seen many changes in the business. Although he doesn’t have access to a CRS, he conducts a large portion of his business when he is on the move - attributing its success largely to the mobile phone. Says Angel, "Today, with the cellular phone a large portion of the business is carried on over the phone. Just because I am out marketing doesn’t mean I have to miss out on business." He adds that with cut-throat competition defining the market place, the travel agent has no choice but to adopt aggressive marketing tactics. "Before, one could stay in the office to receive business. Today, we aggressively pursue clients. There is no possibility of letting go of even one client as he could translate into more business later on. The onus of selling is definitely on the agent. That’s the big difference between IATA agents and us - they just sit in their office and we give them the business."

Supplementing Business

Another emerging trend in the travel agent business is that many sub-agents complement their travel business with associated work. Due to the constant lulls in the business determined by circumstances far beyond agents’ control, the travel trade can take turns that are not always pleasant. Sub-agents couch revenue slumps by operating other businesses on the side. Says Angel, "We have to supplement our business with other ventures, at least those which are related to travel and tourism. We therefore run operations like hotel bookings, tourist taxis, arranging for visas etc. We can’t depend only on one business, especially as it is so seasonal."

While many sub-agents run travel-related services, several may simply operate photocopying machines or phone booths to rake in more funds. Sam from Suja Tours says that he supplements his travel business with a card shop and an STD booth. "When people come here into a travel agency, they expect a variety of services. If you don’t offer, say, STD services, then they complain that the travel agency doesn’t meet their requirements. The greeting cards shop is one way of drawing people into the travel agency." Whether it is for attracting new clients, or to maintain consistent revenue, this trend of operating associated businesses seems to be here to stay.

Networking in Villages

With the glut of travel agents in any city, it is only natural that the industry would gradually look at new pastures to drum up business. Many non-IATA agents have intricate networks, sometimes comprising more than a dozen agents who manage to get a steady stream of small-town residents interested in travelling by air. Agents credit globalisation and the penetration of television in the rural areas for the increased business from these areas. Contends Angel, "Much of my booking, about 60 per cent, is carried on through smaller sub-agents who form a good network in rural areas. About 20 agents filter into villages and smaller towns to book tickets for me."

Pandian has seen several changes in the business since 1985. One shift that he has noticed has been the increased number of bookings from rural areas. With about 15 agents working for him in towns like Erode, Thirunelveli, and Salem, Pandian organises about eight outbound tours a year comprising people from these regions. "One tour that we’re organising for December is a Madras-Colombo-Kuala Lumpur-Singapore-Madras. We will be taking a group of about 25 people from villages to these countries. Thanks to globalisation, people in smaller towns are more aware of the concept of travelling, staying in hotels, and seeing new places. I would definitely say that this is a recent trend," states Pandian. He concludes that about 30 to 40 per cent of his business is culled from smaller areas around Tamil Nadu, although his main office itself is based in Chennai.

Reacting to New Industry Norms

With e-ticketing making inroads into the industry, non-IATA agents are increasingly apprehensive. The new era of high-tech travelling is liable to see a corresponding shrinking in the number of travel agents, both IATA and non-IATA. According to industry sources, many prominent airlines, including British Air, KLM, Lufthansa, have expressed an interest in issuing e-tickets in India. Reacting to the new norms, Gunasekar says, "e-ticketing will definitely gain popularity in India and this is sure to affect both IATA and non-IATA agents. Profit margins will only get more thin and the percentage we charge on tickets will come down." However, Pramila Laskhmanan from Cee Yes Travel Service says that e-ticketing will be confined by restrictions, including lack of access to databases, that will make it a less viable option. "I think only about five percent of ticketing will take place through this system at the present time," says Lakshmanan.

A different industry trend that has been taking its toll on sub-agents is that of ‘Advanced Purchase Schemes’, more commonly known as Apex fares. While the scheme engenders bulk booking especially among corporate clients, the revenue that agents rake in is lower than on regular tickets. Lakshmanan says that business people are more prone to booking tickets last minute, and hence Apex is not hampering agents’ revenues. "Agents end up getting normal commission," she says, adding that Apex is extremely beneficial to travellers and allows for travel schedules to be fixed ahead of time.

Looking Ahead

With sub-agents outnumbering IATA agents by four times, it is imperative for the industry to take note of changes that are taking place within the segment. While most sub-agents are still operating without much incorporation of technology, it is evident that the trend is changing. It may take several years before computers hooked on to the CRS become as ubiquitous as the cell phone in the travel business. Meanwhile, non-IATA agents boldly contend with changes, striding ahead into new territory. Whether it be reacting to Apex fares or marketing in villages, sub-agents are undoubtedly keen on keeping pace with dynamic industry norms.