How to Earn Double-Digit Commissions Selling Air
by Marilee CrockerThis is part two of a Travel Market Report series on how to make money selling air.
If you’re among those leisure agents who tell customers, “Sorry, we don’t do air,” or who handle air only when asked and under duress, you may want to reconsider.
Why? Because some of your colleagues are earning high double-digit commissions on leisure air bookings. Some even net most of their profits from air sales.
You don’t have to be a huge agency to make air sales profitable, these agents say. Even if air isn’t destined to become your biggest money-maker, it can provide a healthy revenue stream, while positioning your agency as a service provider that fulfills the full range of your clients’ travel needs.
“It’s really important that travel agents know that they can take advantage of airline commission revenue,” said industry veteran John Clifford, founder and president of International Travel Management, a $2 million Virtuoso agency in San Diego. “You don’t have to be a multimillion dollar agency to have access to commissions.”
There is no one-size-fits-all approach to making money on leisure air travel. Following is an overview of some ways that your colleagues are netting profits by selling leisure air travel.
Path #1: Charge for your services
It’s doubtful that any travel agent ever got rich from service and transaction fees, but charging fees for air bookings ensures that you at least cover your costs.
Last year, transaction and service fees were by far the dominant source of air-related revenues for leisure agencies. Fees comprised 46% of leisure agencies’ air revenues processed through ARC, according to ASTA’s latest Financial Benchmarking Report.
Peg Martin is one of those agents. Martin is owner of Brittain World Travel, a TRAVELSAVERS member agency in Sheridan, Wyo. Her two-person agency books what she called “a lot of air,” including a significant amount of air-only.
The bulk of Martin’s earnings on air sales comes from the $35 booking fee she charges, though she does earn some commissions as a result of TRAVELSAVERS’ air agreements.
In Martin’s experience, air bookings are well worth the time. “Why would I shy away from air? It’s so quick and easy for us to do. The majority of the time it’s a simple point-to-point, and I can do it in less than three minutes. Why would you walk away from $35?”
Brittain World Travel earns between $1,900 and $3,000 in air booking fees every month, Martin told Travel Market Report.
Path #2: Utilize your consortium
Travel agency marketing groups and consortia are in the process of stepping up their air offerings, making it easier for members to earn money on air bookings.
For Novato, Calif., agency Dimensions in Travel, membership in Ensemble Travel Group, which last month announced an expanded air program, has proven to be a solid vehicle for making money on leisure air bookings.
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“We’ve always viewed the air ticket as a service. But the Ensemble program has really made a tremendous difference. The Ensemble program has allowed us to continue to provide that service and make a profit,” said president and co-owner Jill Romano.
The commissions Dimensions in Travel earns as a result of Ensemble’s air contracts are “tremendous,” Romano said. “The bulk of what we do is international, so the ticket commissions, especially in business and first class, probably average between $500 and $1,000.
Dimensions in Travel has been booking about a quarter of its air volume through Ensemble’s air desk; with the marketing group’s recently announced expansion of its air program, that share will go up, Romano said.
Romano’s advice to other agents was to find the consortium that’s the “right fit” for that agency. “That’s your starting point. Also, talk to the members about how to work with a particular supplier in the air program. We can all help each other.”
Path #3: Find the right host
For independent agents who work with a host, a host’s clout with air suppliers can yield healthy earnings on air bookings. Affiliating with a host gives agents access to the upfront and override commissions and exclusive net or discounted fares that airlines negotiate with larger travel sellers.
The key is to “align yourself with a travel agency that has commission contracts relevant to your business,” said Clifford, with International Travel Management.
This year, travel agent Steve Lincoln found his hosting arrangement to be particularly lucrative.
Lincoln has been selling travel since 1982 and since 2003 as owner of Lincoln Travel, a one-person storefront agency in rural Bridgewater, Va. His full-service agency has developed a specialty in international educational travel for university groups, in addition to a sizable cruise and tour business.
Lincoln is an independent contractor with host agency Nexion. Last year Nexion was acquired by industry heavyweight Tzell Travel and, effective Jan. 1, Nexion members were given access to Tzell’s negotiated air contracts and, with them, more opportunities to earn commissions on published fares.
That changed things for Lincoln. He had relied heavily on consolidator tickets for his international air sales while shopping and booking domestic air himself. When the Nexion-Tzell deal kicked in at the beginning of this year, Lincoln started booking all his air through Nexion.
There was an immediate and lucrative impact. In the first quarter of this year, Lincoln Travel’s income from ARC air sales was up 475% over the first quarter of last year – a nearly fivefold increase. In the same period, his average commission earnings on air sales jumped from less than 5% to 12%.
“If agents truly want to make money in this business and be full-service agents, they need to align themselves with the proper host agency or the proper consortium,” Lincoln advised.
Path #4: Affiliate with a larger agency / commission sharing
Aligning with an agency big enough to have negotiating clout with airlines is also an option for full-service agencies.
There are two ways of doing this: Agencies can give up their ARC appointments and partial ownership to become a branch of another agency; or they can make an arrangement with a larger agency to piggyback on its air deals.
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These days, the second option is preferable, according to travel industry attorney Mark Pestronk. “ARC has been cracking down on becoming a branch. ARC insists on proof of a true acquisition. That’s why it is now safer to get your tickets from a big agency rather than as a branch.”
A smaller agency that affiliates with a larger agency to take advantage of its air deals can continue to use its own GDS, Pestronk explained, “but your GDS connects to the big agency’s GDS and the agency issues the tickets for you. That’s perfectly legal and do-able.” The smaller agency can choose to keep its ARC appointment or give it up.
One agency owner who is on the large agency end of this sort of arrangement explained how it works. “If I’m getting 12% or 14%, I’ll give you 8% to 10%. It drives up my share and you get the commission ” – or the benefit of the agency’s negotiated net fares.
“This is against our [airline] contracts, so we don’t do this openly,” he said, asking not to be quoted by name. “But we all do it. A lot of the big agencies are sharing the commissions.”
Pestronk said that in these types of commission-sharing arrangements, the risk for the smaller agency is minimal, since the smaller agency can maintain control of the booking.
And the rewards, in both upfront commissions and overrides, can be considerable, he said. “The share can be surprisingly high, higher than the little agency can possibly imagine, because the little agency has been used to getting nothing for 17 years.”
Path #5: Use consolidators
For Seattle agent Michael Schrobat, buying international tickets through air consolidators has been the secret to netting the four-digit commission payments that make him smile.
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“They call me the comma man, because I like commission checks with commas,” said Schrobat, who owns CETC Travel Services, a small agency in downtown Seattle.
Schrobat, who opened his agency 10 years ago, has found that there’s serious money to be made on international air when he buys from a consolidator. “Consolidated air is not always the best price, but when it is, and especially when you’re working in business class, there’s huge profits
“If somebody wants to travel business class to Europe, that’s a great way to increase your revenue.” Here’s the part that makes him smile: “A lot of time your income from a business class trip to Europe can include a comma in it.”
The income on consolidator tickets is in the markup, said Schrobat, whose agency is a member of NEST. Here’s how it works:
“In any ticketing to Europe, if we have a client that will fly business class, I’ll look at a price online. Say it’s $6,500. If I can go to a consolidator and get it for $4,000, a lot of time I’ll split the difference. That’s our golden ticket.”
In this example, Schrobat would mark up the consolidator fare by $2,500, so the total matched the fare he found online. Then he would share that amount with the client – saving the client $1,250, while netting his agency a cool $1,250. Markups are not always that high, but they can be, he told Travel Market Report.
Schrobat is always on the lookout for opportunities to use consolidator tickets. “For instance, if a client is traveling on an upscale cruise line that includes the air fare and the cruise line says, ‘For $999 per person we’ll upgrade you to business class,’ right away that turns me into the consolidator shopper.”
Please see Are You Making Money Selling Air? You Should Be, June 27, 2011.
