Johnny Ch Lok

New and Old Economic Theories Explain the Relationship Between Oil and Tourism Industries Johnny Ch Lok

Service fees and commission cuts strategyThe reduction or removal of airline commission continues to challenge travel agencies' profitability It is crucial to understand what trends travel agencies need to be aware of to ensure how to profitability and increase travel agencies' revenues with service-fee models. Service fees are not only a way to compensate for the loss of airline commission but also a way to generate new revenue sources for travel agencies that guarantee their long term profitability. Many travel agencies are expanding their service fee models, both in terms of the mounts changed and the number of service to airline. However, if travel agent charge too much service fee to exceed the general airline travel market service fee reasonable or standard level. It will influence many airlines do not choose to find the travel agent to help them to sell air tickets. Travel agents apply fees most often for airline related services. They charge differentiated fees depending on the destination, type of reservation ( e.g. frequent flyer), number of tickets sold or type of airline ( e.g. full service versus). However, service fee increases can raise customer loyalty and satisfaction. It won't reduce client numbers or result in a lose in clients.. The reason is that service fees can be tailored to suit individual customer. This helps travel agencies target their clients, with tailored services based on their past purchasing patterns and identity services for which clients' willingness to pay is greater, such as trip planning identity service for which pay, such as hotel only or special promotion. To revenue mix for travel agencies is increasingly shifting to service fes as airlines have lowered or cut commissions. Successful travel agencies in many European countries are fast adopting, and constantly upgrading, their service fee schemes. Thus, it seems reasonable service fee level is one important factor to influence travel agents and airlines good relationship. In fact, even travel agents raise service fee, it won't influence travel consumer number to be reduced, even they raise air ticket price. It they can provide the informations concerning the reasonable hotel rooms prices and food quality comparison to satisfy travel consumers' living arrangement or helping them to find the reasonable restaurants' food prices and where are their location arrangement or providing the reasonable airlines' electronic air tickets or paper air tickets sale service, even arrangement any high entertainment quality of travel destination trips to let travel consumers to feel satisfactory. However, I believe the raise air ticket price factor won't influence the travel consumer number to be decreased. Any offline or online travel agents will encounter this crisis. By cutting travel agents' commission. Airlines decreased their dependence on travel agencies as a distribution channel. In fact, three key variable factors will influence travel agents' commission income to be decreased. They include below: ?The unsustainable or no change financial losses by airlines, due to the growth of low cost carriers, leading to an increase in the number of bankruptcies.?No negative consequences from previous commission cuts: airline had progressively lowed the commission payments.?No effective resource for travel agencies to satisfy airlines needs.