British Airways’ “shock” announcement that it will reduce travel agency commissions from five to one percent from the middle of next month has understandably led to protests from the agency side of the travel business. But can anyone really say it was unexpected?

Almost every part of the retail trade has been affected by the increasing bandwidth, and the concurrent rising usage, of the Internet. Let’s start with the newspaper industry. Almost every major newspaper in almost every major city in the western world, at least, has been complaining of falling ad revenues and circulation due to the Internet. To make things even worse, the same newspapers are expected to make their top stories and analysis available for free online. The upside is that they can attract readership from around the world, but the downside is that even the increasing ad revenues on the Internet are not yet matching what they are losing in traditional ad and sales revenue.

Now, every newspaper which wants to stay in business for the long-term realises it must invest continually in upgrading its website and many are even add video reports, often made by or with the participation of, the traditional print reporters who have written the story for the print edition. Where will this all end? I personally see it as a positive trend, and I often prefer to watch how a quality newspaper does a video report over how a TV network does, because so far, the print journalist is actually a real person working on the story while too many TV reporters are really models pretending to be journalists. On Fox News, they don’t even pretend.

Now, let’s go back to the airline industry. The other day, we were looking for a ticket on American Airlines from Barbados to New York, and found one at AA’s website. But when we ran the credit card it was declined. (AA seems to have a problem accepting Visa credit cards, because this has happened previously with another person I know, but anyway, that’s another story.) However, a notice appeared on the screen showing the confirmation code for the ticket purchase and saying that if we took this to the local ticket office of AA the price would be honoured.

Did that mean you could buy tickets cheaper from AA’s Internet ticketing office (aa.com) than you could from AA’s landside ticketing office? Well, we called the AA booking number and checked and sure enough, the price was higher for the same flight. When we asked why we were told that the one we had booked online was an Internet-only special, meaning that not every ticket purchased online would be cheaper than if purchased locally.
However, for the consumer, this means that you should do comparison shopping even among the various delivery channels of the airline you are planning to fly, as well as other online booking agencies like Expedia.

So where does this leave the travel agency, here or abroad? Under increasing pressure to turn a dollar.

There was a time, if I remember right, when the travel agencies were commanding eight or nine percent commissions from the airlines. Those were the days. To make up the difference, some travel agencies now charge a fee to the purchaser to help make up for what they have lost from the supplier. It’s a classic case of the middle men being squeezed out if the producers feel they are not as necessary as they were in reaching the consumer. And no other recent invention that I know of has helped to drive the middle man out of the selling process than the Internet.

Now, is this good or bad? Ultimately, it is good for the consumer, because as long as the system works, he stands the chance of getting the best price. In addition, like all other middle men who feel they are under pressure, the travel agencies are finding new ways to “add value” to the process, so if you don’t want the hassle of doing all that online searching, or if your bottom line is that you would have to spend valuable company and employee time trying to work out complicated travel arrangements for your personnel, and don’t want to risk making a major mistake that would leave them stranded somewhere or inconvenienced, then you should go to a travel agent, even if they do charge an extra fee directly to you.

I think travel agencies will survive and prosper as long as they sell not the just the ticket or the tour package, but the benefit to the consumer of outsourcing complicated travel arrangements to professionals, because even if the Internet is making it more possible for us to do everything for ourselves, is this always the best way to go?  

In the accounting sector in the U.S., H.R. Block has a great ongoing campaign to counter the rise of off-the-shelf accounting software products, which theoretically are cheaper to use than going to the corner store accountant. The idea is like the Ghostbusters’ “Who you gonna call?” theme if you end up with a problem you can’t figure out yourself. In one TV spot, there’s the unimpressed wife telling the hassled husband to “ask the box” as she holds it up in front of his face.

Of course, we here in Barbados do not have a commercial banking fraternity that wants to see us succeed financially on the Internet, because they refuse to make it easy and practical for the average wholesaler or producer to set up his or her own website which can do financial transactions via the web. So the majority of our local websites offer nothing more than infomercials or pretty brochures. To actually sell something to a client who is browsing your site - well, that’s just not for the natives.

Now, I am not saying it can’t be done here. The few times I have made noises about it I got personal calls from the top echelons of the banking community saying that it can be done, you know, and we would do it for you, but it would have to be cleared by our head office in Canada, etcetera. The day we can have a standardised system for every retailer, regardless of connections, to offer online sales is the day when we will see a lot more exporting of the things we produce here on the island, from pepper sauce to fine art. So while I understand that some doors may be closing (perhaps literally) due to the Internet, I wish that at the same time many more could open.

If there are worries about customers from abroad ordering products from some website in Barbados, paying for them on a credit card, and then not having the order fulfilled, which means the bank would have to re-imburse them, I can understand that. But all the bank has to do is set up a credit limit, which would function like a loan or a bank overdraft, for the web retailer, which would be charged whenever something like that happened. If the credit limit was reached, just like with your credit card your account would be frozen until you repay the bank. So the impetus would be on the web site owner to ensure fulfillment of all sales.

The parallel here can’t be much different as to what happens now with your credit card account, but it seems we are so wired for spending foreign exchange through our credit cards that when it comes to earning it, say, through the Internet, well, that’s a whole other ball game, isn’t it?

Do you want your bank to help you use the Internet to earn foreign exchange? Forget it, unless you’re one of the privileged few.  Do you want your bank to help you buy a massive SUV to drive around Barbados in as you contribute to global warming, the export of foreign exchange, the increase in petroleum imports and the enrichment of your friendly auto dealer? Just sign here. Don’t worry, if you can’t keep up with the payments, we’ll just repo it in the middle of the night (we always have spare keys) and sell it to some other needy citizen.