DISTRIBUTION SYSTEM

The main or dominated distribution channel for air travel was the
‘travel agents ‘. They aided travelers in choosing carriers, fares and
supplementary services , such as - hotels and car rentals.

In 1991 ,about 85% of all air travel was booked through travel agents.

Revenue for travel agents reached $ 80 billion in 1990 and a rise of

24% in 1987.

The number of travel agents increased to 30,373 in the year 1990 from
14,804.
Business travelers and pleasure travelers demanded
different services .
 Travel agents were asked to reserve and deliver
the tickets to the firm’s and also enforce ,
monitor the corporate travel policy.
 Travel agents suggested the destinations to the
pleasure travelers . Once the destination was
chosen , the agent combined air , hotel , local
transportation and local touring into a package.
 Most of the air lines utilized commission rate
structure that offered higher commission with
increase in the share of the agents tickets volume
going to a particular carrier known as ‘Travel
Agent Commission Overrides’ (TACO)
 TACO reported 2% of the ticket revenue .
 Average agent commission for booking a ticket
was 8-10%.
 Few air lines ticket buyers were aware of TACO.
Discounts:
 Air lines also offered quantity discounts directly to
large corporate buyers.

 2/3rd of the big companies had obtained discount of

35-45% in full fare.
 Business travelers well received the frequent flyer
programs offered by the airlines as they obtained
benefits.

 In the other hand corporate travel managers believed

that frequent flyer programs brought about higher
air fares.
 Business imposed control on air travel to assure
employees selected the lower fares .

 Occasionally firms had attempted to reclaim the

benefits from frequently flyers program for the
company involved.