At a session meeting of JATA Management Forum 2011 hosted by Japan Association of Travel Agents (JATA) on February 15, a panel discussion was held under the subject of â€œLCCsâ€™ Presence in Our Market â€“ Can Travel Agencies Coexist Peacefully with Them?â€ Shoichi Gonda, executive officer of Kinki Nippon Tourist, moderated the debate, and the participating panelists were: Bobby A. Haque, executive vice president, Global Procurement at H.I.S.; Masaru Kataoka, regional general manager of Jetstar Airways; and Dong Shil Hyun, senior executive vice president, Regional Headquarters Japan at Asiana Airlines.
During the course of discussion, Haque argued, â€œLow-cost carriers (LCCs) pose a threat to many travel agencies, but nobody can stop their moves. What is left with travel agencies as an option is how best we can diminish the threat and turn it into opportunities.â€ He then explained that his company, H.I.S., is trying to strengthen partnership with carriers to ride out the crisis. Meanwhile, he pointed out the problems entailed in merchandizing the LCC seats into package tours because the cancellation charge clause contained in the Provisions to Travel Agency Law is not compatible with the actual business practice. He claims, therefore, changes of business scheme, including amendments of the Provisions, would be inevitable for travel agencies. â€œIt will become impermissible sooner or later for us to hold a bunch of air seats at our disposal up until one month before departure, and then return unsold seats to the airlines with no indemnity,â€ he added.
Two panelists representing airlines discussed relationship with travel agencies from two different standpoints. Although it is widely acknowledged that LCCs are basically oriented toward direct retailing of their seats, Kataoka of Jetstar asserted that Jetstar has never tried, specifically in the Japanese market, to increase a proportion of direct retailing against indirect sales. As a matter of fact, seats for groups and package tours are something that airlines find hard to sell. The airlineâ€™s basic stance, therefore, is to offer seats to meet diverse uses, he continued. Hyun of Asiana disclosed that the proportion of direct sales of Air Busan â€“ a group airline of Asiana â€“ stays at 54 or 55 percent in the Korean market and no more than 40 percent when limited to international flights. â€œWe are mixing and matching our direct sales with indirect sales coming from travel agencies to gain the maximum yield,â€ he commented, suggesting a viability of mutually beneficial relationship between airlines and travel agencies.
Source: Travel Vision
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