Changing with the Times - Part 2


from JAXFAX Travel Marketing 2005 Travel Agent's Guide & Directory to Consolidators - MARCH 2005 VOL. 33, N 3

By Prem Cohly
President and CEO
Hariworld Travels - New York

The airline industry, young as it is, has experienced more than its share of watershed changes in the last 4 decades. The 60s heralded the coming of the Jet Age. The 70s witnessed the introduction of Boeing's massive 747 and of course who can forget Alfred Kahn's brainchild - deregulation! But, amazed as we all were at what was evolving, as entertainer Al Jolson used to say " you ain't seen nothing yet." There was more to come, including zero commissions, paperless tickets, name your own price etc. Major changes in technology dramatically changed the distribution landscape leaving us with names like Cendant, Orbitz, Travelocity and Expedia. As these new faces emerged, old ones passed on into the rich tapestry of Aviation history. Storied names like Pan Am, Eastern, Braniff, TWA and others fell by the wayside unable to cope with the rapid changes and economic constraints that were taking place and making profit elusive. It would appear the evolution of the Industry is not yet finished. Most of our Legacy Carriers are either already under the protection, or are flirting with the prospects of seeking protection under the provisions of Chapter 11.

Already we have seen the transformation of the Domestic Market where the Legacy Carriers are locked in a death struggle for survival against the competition of Low Cost Carriers like Southwest, Jet Blue, Air Tran etc. I guess the old adage of "if you can't beat 'em, join 'em", explains DL's decision to expand the operation of Song and UA supporting their low cost contender Ted. Yes, the domestic scene shapes up to be a battleground for survival with Low Cost Carriers pitted against the Legacies. Meanwhile it is interesting to note that the Legacies have already begun to redeploy their assets, limiting any serious expansion plans to the more lucrative arena of International traffic. In general this appears to be the trend, with massive International expansion underway from Delta, American, Air India, Singapore, Malaysia, Lufthansa, Virgin Atlantic, to name but a few. Added to this is the recent blockbuster announcement by Airbus that in October of next year its super sized A380 aircraft will make its debut in the commercial market place. The double-decker aircraft is designed to carry 555 passengers in a three-class configuration but is capable of carrying more than 800 if the carriers opt to fly it all-coach.

UGLY DUCKINGS TO SWANS

What has all of this, you might say, to do with consolidators? While all of the changes mentioned above have been taking place the consolidator has quietly, yet impressively, evolved in trust, respect and dependence in the eyes of the carriers as prime movers of volume and market share. Not only do they continue to control their long time bread and butter constituents, the ethnic market, but they have established a firm foothold with Independent agencies and have become the darlings of a new and rapidly growing new distribution group, the Home-Based Agents. The traffic of the consolidator is no longer exclusively in the back of the plane. Thanks to their expanding acceptance and aggressive marketing initiatives they have become a growing source of Business Class and First Class traffic. None of this has escaped the watchful eye of the Carriers who actively court the elite Consolidators as a prime channel of distribution. The best analogy that comes to mind is that the Consolidator has been transformed from the ugly ducklings of the 60s and 70s into the Swans of the new Millennium. With all of this capacity to fill the Carriers' needs, reliance on the consolidator to fill seats will continue to grow.

The only constant that we can be assured of in this Industry is that there will be change. There are still some agents out there who have been reluctant to do business with Consolidators. For those agents, I ask you to look at the facts and ascertain who has not only survived but flourished in the face of the changes that have taken place. This year promises to be one of great opportunity so give us a call.