Airline consolidation is something that airlines don’t really like to talk about, but all signs are that the sector is alive and well in Canada.
Airlines continue to rely on consolidators as a distribution channel to sell a portion of their capacity, judging by the number of consolidators who are enjoying healthy sales volumes.
How much does this channel represent to the airlines? That is something they will not tell you. But in addition to the handful of consolidators who have been there for the long term, there has been a proliferation of new consolidators in Canada in the past decade, some specializing in specific ethnic markets, and others selling in all markets, with or without land products.
There are several logical reasons for this, according to Craig Kijek, Senior Vice President, Independent Travel, TravelBrands, the parent company of Intair & Network. “Airlines want to reduce costs. Canada is a large country geographically, with big distribution differences so that the cost is too high for airlines to service all regions cost effectively,” he said. “Unlike the U.S., where consolidators are mostly serving ethnic markets, in Canada, consolidators are in all markets and agents like dealing with us.”
Bruce Slade, Business Development Manager at airline consolidator Huntington Travel agrees. “We become the airlines’ sales force, call centre and customer service departments. Agents get personal service from consolidators and they have recourse if there’s a problem, whereas when they are dealing direct with the airline, finding that personal service quickly can be difficult.”
For the travel agent, dealing with a consolidator has many benefits. “Technology has actually made the landscape more difficult for the agent, not simpler. There’s not just one GDS or portal where an agent can see all fares. We provide that for them. An agent wants to go to one place and find the best price and best option for their customers and that’s what we provide,” said Kijek.
And, of course, there’s the question of compensation. Agents can add their margin to a consolidator fare. Agents tend to be very loyal to the consolidator they deal with. Slade said the average number of years that an agent has been using Huntington is 15.
Jennifer Perry of The Travel Agent Next Door in Thunder Bay, Ontario, says she has been using the same consolidator, Network, for 19 years. “I use them a lot. I prefer consolidator fares for trans-border and trans-Atlantic. I get a better fare than I can get online and I have control over my commission. “
Kijek sees a change in the type of agents who use consolidators today. “Some of the larger agency groups go after their own deals with airlines, while the mid-size and smaller agents have gravitated to consolidators.”
Slade says that a lot of agents now use consolidators for their airline ticketing as they no longer are IATA-appointed. “In the old days, every agency was IATA…not so anymore. So those agents use consolidators.”
Slade said that smart agents know how to find the best price through a consolidator, often better than anything available on the web, and that their clients have shopped online and know what’s out there. The agent can make some money by marking up the consolidator fare to the market price available online.
In terms of which markets are the largest for consolidators, Kijek points to Europe, followed by Asia and U.S. leisure destinations. Slade said that Huntington deals in all markets but that Europe would be largest, followed by Africa, the U.S., Asia and the South Pacific.
Mary Mlinaric of Connection Key Travel in Stoney Creek, Ontario says her agency uses consolidator fares a lot. “We use Huntington for Europe. They have some great contracts and we are able to match the airline fares and add a markup, so we don’t have to service fee the client,” she said. “We get great service and good prices so we’re happy and the client is happy.”
Both Kijek and Slade are confident that consolidators are here to stay. “The ones who have invested in technology will be here. The airlines need us,” said Slade.
Kijek predicts there will be fewer consolidators than there are today, because the airlines will want that, “but we will still be here because we offer everything the agent wants”.