Sector woes give agents a great deal to complain about
The second activity of travel agents - after selling travel - seems to be to complain about the poor state of their industry.
New figures from Iata (the airlines' International Air Transport Association) indicate their complaints may be justified.
The number of travel agencies in Hong Kong has hardly budged over the past 10 years. In 1994, there were almost 300 travel agency members of the Iata Billing and Settlement Plan - a system of accounting between agency and airlines administered by Iata and used by most larger travel agencies.
According to data just released by Iata, that number had fallen to fewer than 240 by the end of last year.
To make matters worse, turnover of those agencies hardly grew over that period, remaining steady at under 3 per cent - which means it fell when inflation is figured in. But that may have less to do with travel agencies than the realities of travel prices.
Some travel prices (certainly the cost of air tickets, although not necessarily hotels and other sectors such as car rental and cruises) have tumbled over the past decade.
As a result, travel agencies have to sell to more customers to reach the same dollar volume. Or sell more, although it is difficult to up-sell because customers are demanding ever-lower prices for travel. Worse, earnings for most travel agencies are primarily based on percentage commission payments - so if overall turnover falls, so does their commission.
This, however, is changing, as travel companies - particularly airlines - stop paying commissions to travel agencies, forcing them to charge their customers a specific fee for a specific service.
The only glimmer of good news for agencies is that average turnover has been increasing by 28 per cent over the past 10 years. Unfortunately, this is for negative reasons - fewer agencies.
What should travel agencies do? One solution is to switch their focus and serve visitors to Hong Kong - a segment that is growing.
Another solution could be to specialise in the mainland market, for both visitors to Hong Kong and for travel to the mainland by Hong Kong residents.
While the market is fiercely competitive, at least agencies would still have something to complain about.
HK AIRPORT STILL ON TOP
Hong Kong International Airport, despite underperforming in attracting passenger traffic from the mainland, is nevertheless still the region's busiest airport.
In the ongoing tussle between the top three airports for regional dominance, the number of passengers passing through Hong Kong's airport in the first quarter of this year increased just over 2.5 per cent, to top 8.3 million.
The number of passengers passing through second-placed Singapore increased by slightly less than 2 per cent to 7.1 million, just keeping ahead of Tokyo Narita airport - which managed an increase of 2 per cent, taking its passenger count (international only) to seven million.
Once Sars-related growth is figured in, starting from April, then Hong Kong will pull further ahead of its rivals.
Although the region's major airlines are counting big growth this year - because the comparison is with last year's Sars-damaged traffic - growth over 2001 is not so encouraging. Recovery from the travel setbacks that started with the 9/11 terrorist attacks is still slight.
Murray Bailey is research director and editor of Travel Business Analyst
