Do Internet and deregulation spell disaster for the Travel sector?
The current relation ship between airlines and travel agents and travel agents and consumers can only survive if it is acknowledged that travel agents do have the right to negotiate compensation for services rendered. An 'open skies' agreement between the US and EU will also contribute to a rapid demise of a global distribution network because consolidation and concentration will increase along the lines of trade-blocs. The nearly finalized merger between KLM and Air France might be a first indication. This is what Jaco Appelman argues in his dissertation: Governance of Global Interorganizational Tourism Networks: Changing forms of co-ordination between the travel agency and aviation sector, that he will defend on the March 19 at the Erasmus University Rotterdam.
Liberalization, deregulation and the Internet caused a transition to a service-fee environment in the US. Customers pay a fee for the services travel agents perform at their request. In this market several big carriers compete in a national economic space or market. Appelman researched if and how deregulation and new applications of web based information technology change the forms of co-ordination that govern the distribution relationship between airlines and travel agencies. He argues that there is a chance that more pronounced trade-bloc formation between the US and EU leads to a less global ticket distribution system than it currently is. For the traveler, such a development will mean longer and more awkward transit-times, more lost luggage, more expensive tickets and more difficulties in planning and assembling a trip.
At a more general level it is argued that mobility is central and normal in developed market-driven economies, that the travel sector plays an important role in the generation and diffusion of innovations and that travel agencies feel that they are forced to use the electronic channels erected by airlines. Internet and all other changes associated with it will not wipe away travel agencies, but especially the small-leisure based travel agencies will suffer and there is a danger that the innovative propensity of the travel sector will erode. That is why the current forms of co-ordination need to be adjusted and not abandoned. This will only work if airlines acknowledge that in a principal (airline)-agency (travel-agent) relationship an agent needs to be compensated for the acceptance of an unequal position and the fact that services are performed on behalf of a principal.