How Agents Can Profit from ULCC's

Ultra Low Cost Carriers are making a splash in Canada and are part of a growing trend of companies offering consumers cost-saving alternatives to travel. But can booking ULCC’s for clients be profitable for agents? Many say yes.

“Our industry is well used to not making commission on air, and most of us have started charging service fees, says Natalia Weidner, Travel Professionals International . “We charge a service fee on all air reservations and that would include booking a ULCC.”

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Scott Penney of The Travel Agent Next Door, agrees.” I would apply a service fee for a client who is booking and this is the only product they are purchasing from me. However, for a client who is booking other services and this just an add-on I would not charge a service fee."

These agents are right – when TravelPulse Canada spoke with Swoop president and CEO Steven Greenway last month at the airline’s launch, the veteran of European and Asian low-cost airlines told TravelPulse Canada that agents stopped making major commissions on the sale of airline tickets years ago.

“For the most part, for short haul travel … there’s really nothing to be had,” he said at the Swoop media event in Hamilton, Ontario. “My argument is that the air fare is a hook; it gets the person from A to B. But it’s what the person does at B that counts. It’s the land, the transfers, the activities; all these things that still have a nice margin for travel agents too enjoy.”

The agents TravelPulse Canada spoke with all stressed the importance of outlining the inclusions and exclusions that come with booking an ULCC, so the client is aware that it’s not always apples to apples when comparing a discount fare with that of a major carrier. In some cases, when adding in the additional costs associated with baggage, advanced seat selection and meals, the fare is competitive to that of a major carrier.

“If the client insists on booking the carrier, we have them sign a waiver form that I did not recommend it over a major carrier. Our invoice will reflect that changes or cancellations of the carrier is not the fault of the agent,” says Holly McBean, Travel Only.

Weidner says before she books any flights, especially a low-cost carrier or a no-frills fare, she gives them an idea of the ancillary costs that are not included so that they can compare.

“I suspect that my clients, when given the big picture and ability to weigh the pros and cons, will find ULCCs may not be the right fit.”

ULCC’s are just one piece of the booking puzzle however. Clients looking for lower fare options often are avoiding traditional hotel properties and packages in favour of peer to peer accommodations such as Airbnb.

Should the ULCC’s start to serve southern destinations, how can the industry brace for this potential onslaught of clients booking their own accommodations? The agents we spoke with all said service is key, and what brings clients to agents in the first place.

“As agents we must focus on why we are here and the value we offer to our clients. No doubt we could possibly lose a booking by some clients who will want to do it themselves, but for the majority of our clients they appreciate what we can offer and the value we provide. We are the experts, the time savers, and we think of everything,” says Penney.

“Focus on service. Focus on your experience. Focus on taking away client's stress and providing them peace of mind, says Weidner. “Avoid promoting the lowest price, deals and cheapness. Offer your clients value, insider pricing, exclusive promotions. Be indispensable. Be a valuable service provider to your client who they cherish - just like their doctor, dentist, mechanic or esthetician. People don't shop around for services that matter to them because they have a relationship with their trusted service providers. Get in that space!”

McBean says it’s also important to remind clients of the consumer protection laws that are in place, including updates to Bill 166 with even more protection - something TICO has been a strong advocate and leader.

“Our clients need education on what our value is when booking with an agent. TICO has been doing a lot of advertising to ensure consumers know the importance of using an agency or agent to book their arrangements.”

It will be interesting to see how the ULCC industry plays out in Canada, though Greenway is optimistic.

"This is the start of what I think is a travel revolution,” he said, one that will allow Canadians to see more of their own country and more of the world.