Smoothe Move Northwest!

Last time you walked into a bank to deposit your paycheck, were you charged extra because you dealt with a person instead of an ATM?

When you bought a magazine at the bookstore, were you slapped with a “service fee” because you purchased from an employee instead of its Web site?

No, of course not.

But that’s not true if you’re booking a ticket on Northwest Airlines.

Starting next month, it’s going to cost you an extra $5 if you call Northwest. If you book through an agency, you’ll pay a $7.50 surcharge, and if you go to the airport, the markup will be $10.

The absurdity of this move is both frightening and at the same time, funny.

It’s frightening because there are millions of people out there without Internet access or credit cards. These folks are now going to be penalized for doing business with Northwest since they will be forced to deal with a travel agency or a Northwest employee face-to-face.

It’s also frightening because air travelers are now faced with a sneaky fare increase and a possible reduction of choices.

No agency will ticket Northwest at a loss - remember, an agency is making no money from selling you the ticket now. There’s no way they’ll absorb this fee as a cost of doing business, so it won’t offer Northwest as a flight option.

Can’t your agent just use Northwest’s Web site?

Not really. If I book a ticket on Northwest’s site as your travel agent, I also lose all control of your record. And you lose the ability to interface with my agencies’ 24-hour services, management reports or back-office accounting programs. If I book on Northwest’s site, I also have to “dual-entry” every ticket, reducing productivity and increasing the possibility of agent errors.

I’ll probably have to raise my fees as a result.

Northwest’s decision is funny, too. Funny, because it’s so ridiculous. First, Northwest caps its commissions, then it eliminates them. And - let me get this straight - now it wants me to pay it to sell its tickets?

I can’t think of any other business that forces its distributors to pay for the privilege of selling its product. Not one.

I’m surprised that Northwest’s unions are not up in arms. This is a clear indication that the airline is trying to eliminate jobs by shifting its bookings to the Web. Indeed, if the masses flock online to Northwest, there is no longer a need to staff the call centers and ticket desks at the airports.

And what if Northwest’s Web site can’t handle the spike in traffic that this action is bound to stimulate? The airline hasn’t addressed that question yet.

Needless to say, this is a huge mistake for Northwest and it very well may put them on the heels of the other bankrupt carriers. Sabre (one of the major Global Distribution Systems for ticketing) has renounced its efforts and considers the airline in breach of contract. As a result, Sabre will no longer share some information with them - and information is critical when you’re selling airline tickets.

These are uncertain times, with carriers on the verge of bankruptcy or liquidation. The balance is easily upset. I’m afraid Northwest has tilted its distribution system against itself.

I hope that the others don’t follow, because it will set a bad precedent for every other business model that trades both online and in the real world.

Online sales were designed to be a cost savings over traditional models, not a replacement. Certainly, no one should be punished because of a desire to transact with someone who is professional, knowledgeable, fluent in English, friendly, and able to provide customer service.

So when the fax from Northwest Airlines arrived in our “in” box a few mornings ago with its unfortunate announcement, we did what we had to do.

We stopped selling Northwest Airlines tickets.

Newton's Law of Travel

During the past few weeks I’ve read many articles with the tips and tricks on how to get the best deal on airfare, hotel rooms, car rentals, and leisure vacation packages. But be careful what you ask for - and who you ask.

As a travel agent, I can’t help but think of Newton’s Third law of Motion: “For every action, there is an equal and opposite reaction.” While Newton was right on, he was not in the travel industry and those opposite reactions (mostly unseen by the consumer) can wreak havoc on your agent.

For example:

Airlines. There are dozens of ways to save a buck or a thousand with the airlines. The problem is that they tend to be “illegal” in terms of their contract of carriage. Our own Supreme Court Justice Antonin Scalia skirted one rule while duck hunting with our Vice President. He purchased a round trip ticket because it was less expensive than the one-way ticket he needed, since he was returning on Air Force 2.

Hidden Cities are another workaround. Let’s say that there is a seat sale between West Palm Beach and Baltimore, but you want to travel to Philadelphia and there is no seat sale that is as low as the one to Baltimore. If you booked the ticket from West Palm Beach to Baltimore with a connection in Philadelphia, and got off in Philly, you would be using the hidden cities trick.

Back to back ticketing is another scheme where two low fare tickets are purchased and only one way of each set is used to skirt the higher price. Rarely is the client punished for these crimes, but Newton’s reactions will be felt full force by your travel advisor. Your agency will probably be charged the full walk-up fare for the discounted route and there is little it can do to defend itself. If not paid, the airlines will prevent them from ticketing - essentially putting them out of business for that particular airline.

Please do not put your agent in an awkward position by asking for a favor “just this once” because once is all it may take!

Car rentals. You walk up to the counter and the new employee offers you an upgrade at a minimal cost. Sounds like a great deal. Chances are that they have already screwed up your reservation and probably don’t have your requested vehicle. While it may sound good on the surface, Newton’s Law will probably be prevailing.

Once again, Newton’s Third Law swings into effect. This “moneysaving swap” will negate your agent’s booking which will eliminate any commission he or she might have received, but if there is an issue with the rental, your agent is now effectively out of the loop, leaving you to fend for yourself directly with the rental company.

Hotels. A well-respected daily publication (when their reporters are not plagiarizing) recently mentioned a “tip” to look for large companies in the area of your destination and to call local hotels looking for their special “corporate rate.” This is fraud, pure and simple. This rips off the hotels from needed revenue. This will rip off your travel agent because these negotiated rates are never commissionable. And Newton proves himself once again because the properties must recover these costs in some way - resort fee, exorbitant telephone fees, increasing rates, parking fees, etc. - to you.

Workarounds and loopholes are best left to Enron and the IRS. In travel, let’s keep Sir Isaac at bay and work towards a win-win relationship for everyone. We are all entitled to be compensated for our work, product or service. Let’s not shortchange the effort.

Besides, do you really want to rip off a company that will be transporting you at 30,000 feet above the planet?

Travel Agent? Or Double Agent?

A travel agent used to cost nothing to use. Not anymore.

When airlines eliminated commissions paid to travel counselors, agents began charging service fees. And by and large, customers went along with it, in part because the fees implied that the agents were now working for them. Exclusively.

But that’s not true. Service fees never really replaced the revenue from the airlines. They just supplemented it.

The question is - and it’s a question most agents may not want you to ask - does this create a conflict of interest?

Maybe. Maybe not.

My mother always told me that “it never hurts to ask” and I think it’s always worth following the money. I mean, the agent is probably asking some probing questions of you as well, and any good relationship is based on trust.

Today’s travel agency is a far cry from the bored housewife who used to run the local agency simply for the free travel and a generous second income - both of which are virtually non-existent today.

Today’s agency is probably a part of a consortium or cooperative in order to maximize its buying and earning power. Today’s agency will also charge you a fee for the added value it brings to the transaction.

Today’s agency may earn an override - that’s trade-talk for a bonus payment - based on sales of a particular supplier. Today’s agent also adds to the basic product from the supplier - personal recommendations, insight, destination guides, after-hours service, problem resolution in a timely manner, and, of course, a true appreciation for your business.

Most importantly, today’s agency probably operates on less than a 9 percent margin.

Today’s agency wants your repeat business and should be prepared to discuss how they are compensated. As with most business entities, total revenue is made up of several income streams. Your agency needs to keep people employed, pay the bills, and hopefully make a profit. There is nothing wrong with achieving these goals from two sources as long as the interest of the principle (the client) is served.

Other suppliers have found secondary income streams, too. Airlines are charging for food and changes to reservations. Cruise lines are charging to eat in specialty restaurants and for ice cream. Hotels charge resort fees and exorbitant telephone rates. Car rental agencies are charging for … well, whatever they can. And our agency even created a cartoon character and produced a poster in 2002 which supplemented our income stream.

In our travel agency, we have a “soft dollar” agreement with a major carrier where we can earn free travel. Their service overlaps with other carriers, and we have no problem directionally selling to them as long as the clients’ needs are met.

With our free travel, we sponsor local charities, attend industry education seminars, offer tickets to clients for holiday parties, and even use them to remedy our rare screw-ups. Because of this relationship, our airline account manager is able to work “miracles” - wait lists get cleared, upgrades mystically appear, emergency rows and bulkheads become available, and any issues are resolved in short order.

Who wins here? We both do.

We typically receive a commission from other travel suppliers ranging from 5 percent to 12 percent and we also charge a fee on top of that. Our selection of vendors is made with the best interests of our clients and our agency. We will never sell a product that is not right for the client - and we know our clients.

If your agent sells you something you do not feel is right, call him on it and ask him why. We are not afraid to answer or to turn away business if it is not good for our agency or the client. The business that we write must be a good match to insure satisfaction. If a client is referred to another source, at least they will know why, and that we were honest. More likely than not, he or she will return.

Happens all the time.

I regard accepting payment from two parties as one way of keeping the costs to the consumer down. However, there will be a day in the not-too-distant future where there will be no commissions or awards to agencies and they will be operating off of a net basis, eliminating any perceived conflict.

The product will be available to the agency to mark up as the market will bear (traditional retail model); or it will be sold to the consumer at cost plus the agency hourly consulting fee (consulting model).

Personally, I can’t wait.