Travel Agent Airline Commissions VS. Cost of Ticketing Errors
Okay, it's time to talk about travel agent airline commissions and ticket errors/debit memos (which we've already chatted about here). But if a picture is 1,000 words then an infographic is probably closer to 20,000—so I'll keep this short:)
Let me start with a spoiler alert: air ticketing has a lower profit margin for travel agents compared to just about any other segment of booking travel. Though some airlines offer travel agent commissions upward to 3-12% (I'm majorly ball-parking this number, fyi), other airlines offer zero commissions. It depends on what airline/route/class of service you're booking (and a whole lot of other things). At the end of day, the average total travel agent airline commission among all booked air in 2015 is 1.36%. Kinda stingy, but dem's da rules. (You can read about the bigger picture of travel industry commissions here.)
Income from Travel Agent Airline Commissions
When you anticipate ye olde airline debit memos (ADM), travel agents will find fewer of those airline commission dollars going into their bank accounts. In 2016, the average debit memo expense to agencies was $1 per $577 of air booked.
Not bad, except on average there is $7.85 in travel agent airline commissions per $577 of booked air—so that measly dollar suddenly seems like a whole lot more. The cost of ticket errors is 12.7% of the total commission on average. We're talking a big picture estimate here—like the range in air commission, ADMs fines also cover a drastic range depending on the error (we're talking a typos versus fraudulent bookings).
Of course booking air can still be a robust income stream for agencies (especially for corporate travel management companies). After all, your clients have to get to their vacation destinations, right?! But these are just a few issues of risk/reward to consider—especially if you're new to the industry. It's not just about the money, but also about the time and resources it takes to learn and use Global Distribution Service (GDS)—which can be significant.
The silver lining here is a service fee that most leisure agents charge for ticketing air. The average service fee agents charge comes in at $38. This varies depending on how the client books (online, over phone etc) and whether or not it's domestic or international. And well, in the end, you get to decide :)
How Do I Book Airline Tickets Without GDS?
If you're a newer agent, it's unlikely you will have direct access to the GDS system. But don't despair, travel agent airline commissions aren't out of the question for you! There's other ways to book air without risking fines.
- Tour Packages: If you book a tour package, air will be included. Hurray!
- Direct Booking: You can book air directly through the airline's site and charge a service fee (just imagine how you saved your clients hours of browsing time—they'll thank you for it!)
- Have Client Book the Air Portion: Some agents will let clients be responsible for air-only reservations.
- Consolidators: Consolidators are wholesalers of international airline tickets. Pretty much every host agency (what is a host?) will have access to consolidators . . . which only work with travel agencies (not the general public). You can either book net fares, published fares, or commissionable fares (read more on airfares here). Two benefits of using a consolidator is that you can bypass the very complex GDS system, and you will have access to private fares (the net rates, etc.). Ask your host agency for information on consolidators if you have questions!
- Ticketing Desk: Some (not all) host agencies also have a ticketing desk service that can book flights on behalf of agents. Usually there are applicable fees and certain service hours, so you'll want to ask about that (if they even offer a ticketing desk).
Thoughts? Questions? Feedback? Share in the comments below!