Implications for Retail Travel Agencies of the Growth of Internet Distribution by Airlines

To contain costs many scheduled airlines have developed web based distribution channels to bypass travel agents thus reducing the cost of commissions. Apart from allowing airlines to reduce costs the Internet has also facilitated the establishment of a new group of do com travel firms effectively creating four parallel distribution channels; airline Internet portals, dotcom companies, direct customer to airline sales and traditional shop front travel agents. For airlines to achieve savings via the Internet, strict cost controls will need to be implemented and even then it is possible that only a limited number of airline products, particularly point-to-point travel, will yield the savings desired by airlines. This paper examines the impact of changes to airline distribution systems on the retail travel industry.