Final thoughts

Fix things now, because there's always going to be another disruptor

RICHARD VANDERLUBBE

This is the final part of a three part series written by tripcentral.ca’s Richard Vanderlubbe. This week he writes about agents and the need to pay them properly for the services they provide to both their customers and their suppliers. And about the fact that they also need the right tools to be able to do their jobs effectively and efficiently.

Vanderlubbe

Vanderlubbe is nothing if not practical and one of the points that he makes this week is that agents not only need to be paid properly for the services they render to their clients and to their suppliers, they also need to have the right tools to be able to render those services effectively and efficiently.

As an example, he points out the limited ability agents have to modify bookings – a fact that was brought home by the mass cancellations and re-bookings that flooded in as COVID-19 shut things down around the world.

“Ensuring that we can quote not only prices, but specific cancellation amounts per booking, or modify bookings and quote differences in fares confidently without risk of debit memos or making a mistake, is critical in keeping distribution costs in check and efficient,” writes Vanderlubbe.

He writes: “When we must change the back end of a return ticket — where departure has already occurred — it is manual and risky because it does not auto-price. And for tour operators and cruises, we must call, wait on hold, speak to res agents that are often newly hired and make mistakes, misquoted, and even hung up on.”

The point, he says is that: “Handling modifications one at a time is inefficient for all of us. Temporary systems need to be invented in triage mode to get us over this crisis, but investments in technology need to be made to allow us to correct names, modify bookings, re- price, cancel, and request new documents without relying on calling humans on the other end.”

And he adds that: “These developments have been postponed for years in favour of getting more new bookings – and we are paying the price now.”

On the issue of change fees and penalties, Vanderlubbe makes it clear that they should not gouge the consumer, nor should they be “a ridiculous profit source.”

“Gouging,” he writes, “is when you have someone trapped with no market alternatives and are charging economic-rent amounts. This includes travel agencies. The fee should reflect the cost plus a reasonable markup for the work involved, and those costs should be very low if the systems are available for us to make the change in seconds. This is being consumer friendly.”

In the world of COVID-19, Vanderlubbe writes that customers will be afraid to get back on airplanes because of the possibility of getting sick on board.

He observes that international travel has been stigmatized as an activity that can carry and spread disease, but “leav-ing this risk to be covered by private insurance has further risks. The risk is that people choose not to purchase this insurance and will risk travelling with a fever or symptoms to avoid financial loss.”

However, he says: “I think the industry needs to re-think the cancellation due to a medical issue that could be transmitted to others. This is not to say that ‘any’ medical condition would trigger this automatic forgiveness, but I think a valid medical certificate might be worth allowing.”

As for repatriation costs, Vanderlubbe points out that package tour operators have been “implicitly, but not expressly, providing repatriation costs, continuing: “This needs to be formalized and marketed. Right now, it is a case by case decision, but the cost of repatriation is included for hurricanes – a small risk compared to what we are seeing. The repatriation policies for a package offered by at tour operator should be clear. It may not be guaranteed – but it should be clear.”

COVID-19, writes Vanderlubbe has shown the value of travel advisors to suppliers.

“The B2C customers are easy and cheap to take bookings from,” he says, “but they are suddenly incredibly costly to service and re-book.”

He continues: “There is always pressure to reduce costs, and travel agency commissions, marketing funds and overrides are easy targets. But suppliers should think about this carefully. A lowering of travel agency compensation will either results in higher fees – increasing the effective price of the supplier service booked with agencies – or cause agencies to cease operations altogether.”

“Travel agents are not highly paid,” Vanderlubbe points out, “and they are expected to understand a complex and byzantine cacophony of ever-changing supplier policies. There are many ‘gotchas’ that cause financial risk and liability if misquoted or omitted.”

He says that: “The recommendations I am making will result in more work and more disclosure [for travel advisors], but I believe it is necessary. Any alignment in general terms and conditions and industry norms for terms and conditions, cancellation and change fees will make this less costly overall. Complexity and changes will result in more cost for travel agencies to sell and explain.”

So, what’s the take away?

Well, writes Vanderlubbe: “We are in a bad situation because we have all become dependent upon being paid in advance. We all have egg on our face in the consumers’ mind by seeming unethical and immoral by holding funds when the service was not provided. While the travel agency and tour operator service was performed twice or more – booking, answering questions about cancellation and changes, and now making the re-booking, the actual travel service was not performed – not due to the fault or action of our customers, but because of a government warning for their health and the health of others, the elimination of coverage of COVID19 for medical policies, and their fear of being stranded abroad.”

Vanderlubbe observes: “We cannot fault our customers for ‘no showing’ for their flights as of March 13. Our lines were jammed, and we tried heroically to report all cancellations, but the force of the tsunami wave overwhelmed our collective phone systems, booking systems, and emails. It’s not their fault, and it’s especially not their fault that the industry cannot refund their money, because globally, travel suppliers are all addicted to advance purchase funds going to current operations.”

And he concludes: “If we can’t solve this ourselves, governments around the world will start solving all this for us, and we probably won’t like what we get.”