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Role of Intermediaries in the Airline Industry
The airline industry has always depended to a large extent on intermediaries who sell their tickets and arrange travel packages with consumers. The role of intermediaries is largely that of a facilitator, arranging discounts and making the purchasing process more convenient. Much of the innovation in the travel industry has come from intermediaries, who have discovered new ways to package trips and new ways to market discounts. This has freed up the resources of airlines.
Travel agencies were once one of the main ways that people went about planning a trip or booking a flight. Travel agencies were often given access to airline databases that allowed them to offer cheaper flights and special deals. Their role in the airline industry today has largely been supplanted by Internet vendors. This does not mean there are no travel agencies left, however, with many consumers still preferring to book flights in this way.
Internet travel sites have come to take a primary position in the airline industry. The majority of consumer flights today are booked through online travel agencies. Consumers can often find deals by using the search tools that these sites provide. Many online agencies specialize in offering discount flights. Airline companies are able to rely on the electronic infrastructure of these booking sites to supplement their own to facilitate a more convenient and timely purchasing process.
Airlines routinely pay out commission fees to both online travel sites and travel agents in order to keep them selling tickets to consumers. There is often a tension between airlines and these intermediaries, as the airlines would prefer to reduce their commission costs, while the intermediaries would like to see them rise higher. It is estimated that airlines now pay out 3 to 4 percent of their operating costs in commissions to online travel sites.
It is not uncommon for larger airlines to partner with smaller regional players to transport consumers. These intermediaries help larger airlines to lower their costs by reducing flights to less-visited locations. Often, consumers will purchase a travel package that sees them flying on a major airline for part of their trip, and then flying with a smaller airline for the second part. Most large airlines prefer to fly in between hubs in large cities.
- "The Guardian"; EasyJet Slams 'Snake Oil Sellers' in Offset Market and Goes It Alone; Dan Milmo; April 2007
- "The New York Times"; American Airlines in Fee Battle With Web Agencies; Jane L. Levere; January 2011
- University of Pittsburgh; Pricing Practices of Resellers in the Airline Industry -- Posted Price vs. Name-Your-Own-Price Mechanisms; Esther Gal-Or; January 2009
- "Journal of Retailing"; Selling and Opaque Product Through an Intermediary -- The Case of Disguising One's Product; Scott Fay; 2008
- "Journal of Industrial Engineering and Management"; Progress in Airline Distribution Systems -- The Threat of New Entrants to Incumbent Players; Athina Sismanidou, et al.; April 2009
Casey Reader started writing freelance in 2010. His work appears on eHow, focusing on topics in history and culture. Aside from freelance work, Reader is actively pursuing a career in creative writing. He graduated from Centenary College of Louisiana with a Bachelor of the Arts in history and English literature.