Travel agencies making considerable money on air

Travel agency

In the nearly 20 years since Delta Air Lines capped commissions, triggering the end of across-the-board commissions for travel agencies, conventional wisdom has held that there is no money to be made selling air. As is so often the case, however, conventional wisdom is wrong. Agents who know the tricks of the trade when it comes to dealing with airlines can make a good deal of money on airfares.

“I just laugh when people say you don’t make money on air,” said Bob Joselyn, president and CEO of Travel Agency Management Solutions (TAMS).

Agencies, he said, have several ways to make money selling air: through service fees, GDS segment income, back-end overrides on domestic and international flights and front-end commissions, usually on international but occasionally on domestic flights.

Joselyn divides the agencies he works with into two types when it comes to selling air: those who make the bulk of their money on air strictly through service fees and those who make money on some combination of service fees, commissions, back-end override payments and GDS segment fees.

The smallest agencies he works with see yields of 6.8% annually on air, Joselyn said; larger agencies with $100 million and more in sales typically see yields of about 5.3%.

“There is so much money to be made on air,” said Robbie Louchheim, president and owner of Travel Destinations, a Scottsdale, Ariz., host agency that is a member of Ensemble. Louchheim said that between $8 million and $10 million of his 36-year-old company’s $20 million in annual sales is air.

In fact, Steve Lincoln, owner of Lincoln Travel of Bridgewater, Va., a member of Nexion, estimated that he makes more than $100,000 a year on air, through both commissions and service fees.

Nexion has seen an increase in its MillionAir winners — agents who sell $1 million worth of air or  more (Lincoln is among them). And Ensemble has seen agent participation in Ensemble Air grow “tremendously,” according to Brian Chapin, senior director of air and travel solutions for Ensemble.

Courtesy: travelweekly