15 November 2011

Traditional Travel Agency groups take South Africans for a ride, survey reveals

Submitted by Melissa

In brief:

  • Traditional South African travel agencies overcharge customers for international flights
  • Flight prices, for the same dates, vary by as much as 87% between agencies
  • Traditional travel agents sell the flights that earn them the highest margin - even if it’s not the cheapest deal for the customer
  • Nearly 40% of the surveyed traditional travel agents either refused to offer quotes over the phone or did not bother to get back with a quote at all
  • Flight prices to Amsterdam, Frankfurt and London were the most inconsistently quoted

Johannesburg, Friday 14th November 2011 - South Africans are being ripped off by traditional travel agencies who do not provide the best available flight prices for customers, even though that’s what they are being paid and trusted to do, according to research commissioned by Online Travel Agency, Travelstart.

Synovate, a respected multi-national consumer research company appointed by Travelstart, contacted 50 different branches of six traditional travel agency groups to explore flight pricing, pricing consistency and the level of service offered. The researchers asked for the cheapest available prices for return economy class flights from Cape Town and Johannesburg to 10 international destinations that are popular with South African travellers.

The vast difference in prices quoted means that a family of four flying to London could be overcharged by as much as R30 000!

Of the 10 destinations surveyed, the prices for flights to Amsterdam, on the same dates, were the most alarming, with the quotes ranging from R6,000 up to R14,300 from Cape Town, and from R7,429 up to R12,426 from Johannesburg.

Even more alarming was the fact that six different outlets of one particular traditional travel agency group offered quotes that varied by up to R5,300 on the Cape Town to Amsterdam route.

The prices quoted to London from Johannesburg on the same dates ranged from R8,628 up to R16,155 – a huge variance of R7,527, which equates to a variance of 87% for a family of four travelling to London. This would mean an overcharge of more than R30,000. 

Flights to Frankfurt on the same dates were no better, with one agency quoting R6,115 from Johannesburg and R6,369 from Cape Town. This is great if you were lucky enough to call that particular agency to book those flights. But if you were unlucky enough to call a different agency, you could have been hit with a fare of R11,400 from Johannesburg and R8,213 from Cape Town - a whopping 86% more expensive in the case of the Johannesburg price!

And proving a pattern in the research, one traditional travel agency group offered five different quotes, varying by as much as R4,577 from five of its Gauteng branches, for the exact same Amsterdam flights from Johannesburg.

“We were expecting different prices when we commissioned this research to compare our online service with traditional offerings, but we were shocked at the huge price variations from the traditional travel agency groups,” says Stephan Ekbergh, CEO of Travelstart. “We were even more surprised at how different branches of the same travel agency group were quoting such different fares. This research shows that South African travellers simply cannot trust that the traditional travel agencies will get them the best available flight deal first time round.”

Ekbergh explains that every travel agency (whether online or traditional) has access to the same fares distributed by the airlines, worldwide. “So pricing discrepancies, like we have seen in these results, occur when travel agencies load fares with exorbitant and inconsistent service fees.

"Clever marketing and advertising campaigns, like ‘price beat’ guarantees and promising unbeatable prices lead customers to believe that they can trust the big buying power of the traditional travel agency groups. This research proves exactly the opposite."

Ekbergh also says that this could be due to modest salaries within the travel industry. Many agents are compensated with a small base salary and a commission structure based on the service fees that they charge, so it’s hard for agents to always have the customer’s best interest at heart. 

What’s worse is that nearly 40% of the traditional travel agencies surveyed did not offer the very basics of good customer service - some did not bother to respond with a quote when they promised to do so, and others refused to offer a quote over the phone.

“Many traditional travel agents prefer to deal with a customer face-to-face. If they can see that a customer is a novice to the world of travel, or is just too busy to do their own homework, they will simply suggest the flight on which they can make the highest margin,” Ekbergh comments.

Online is a better way!

“In the US, up to 50% of all flight bookings are made online,” says Ekbergh. “This trend is slowly catching on in South Africa, with 5% of flight bookings currently being made online.

Consumers are realising that online travel agencies offer them the advantages of lower prices, greater transparency, more flexibility, convenience, a wider choice, and more control over their flight booking experience.” 

Booking flights online allows consumers to take control of their own travel arrangements, with all the relevant options visible on one screen – enabling them to compare routes, airlines, times, stops and to choose which flights they want. They can also choose how much they want to spend on potential add-ons like insurance.

“The beauty of online travel shopping is that you can do it whenever you want to, even if you’re sitting in bed, in your pyjamas, late at night. Every step is transparent, you are in charge” says Ekbergh.

About the research

  • The researchers contacted 50 different outlets across six travel agency brands, and successfully collected 317 quotes for flights to 10 international destinations to investigate pricing, consistency and the quality of service offered by the travel agents.
  • The agents who were contacted were not told that they were part of a survey, in order to establish the level of service that would be offered to any regular call-in customer. The first price that the agency quoted was used in analysing the results of the survey – so no negotiating took place.
  • While Travelstart commissioned the research and identified six travel agency brands and 10 popular flight routes, Synovate selected the dates and flight times, the numbers of passengers and other elements that were used in the research.
  • Synovate conducted the research independently, and compared prices offered on the Travelstart website at the same time that it queried prices from the agencies surveyed.