Travel agent service fees — some background and information

by Janice Hough on April 18, 2011

One thing I’ve noticed in a lot of responses to posts is that many travelers have no idea of exactly when and why travel agents charge service fees. It doesn’t help that there is no consistency in the industry.

Here’s a little background to perhaps make the fees more understandable and palatable.

Years ago, most travel agents worked for free from a consumer’s point of view. Airlines paid agents about 10 percent of the booking price to issue their tickets and, in exchange, they didn’t have to hire as many reservations staff. Plus agents could bring airlines additional business.

Then all that changed. Airlines, starting with Delta, first capped, and then basically eliminated commissions. Now, to be fair, some agents were “rebating” commissions back to their clients, which means they were undercutting the carriers, but overall it was a cost-cutting move.

Also, as the internet grew more popular, airlines figured they could easily sell tickets cheaper themselves. While travel agents could usually at least match online prices, they started charging fees.

Since the sites have limitations (to put it mildly) and because some people will pay for advice and the opportunity to sometimes save money, travel agents are not nearly as extinct as some people thought.

The fee structure, however, is confusing to many travelers. There isn’t a lot of consistency. Here’s a bit of background and general information based on my experience.

Some travel agents charge flat fees per ticket, others charge a percentage. The problem with the flat fee at times is that it can seem like a high percentage of the fare. On the other hand, many agents agree that some of the cheapest tickets can be the most work.

Charging percentages may give a prospective client the idea the agent will choose a higher priced ticket to make more money. (The defense against that is that any agent who works that way will lose clients.)

With international travel, some agents have contracts with specific airlines, or can work through consolidators where they get paid a form of commission for issuing a ticket. So, a travel agent may reduce or eliminate a fee in those circumstances. (Although for the most part there are no commissions on the very lowest fares.)

What happens with a ticket change? There isn’t consistency here. Some agents will charge a flat fee per trip (which includes any changes booked). Others will charge to reissue a ticket. (If it’s a problem with a canceled or delayed flight, that’s generally covered under the initial fee, even if it takes hours to fix. In fact, one of my favorite clients says he considers our fee “travel insurance.” )

With a change in advance, I can understand a traveler’s frustration with paying a second fee on top of an airline fee, especially when those fees start at $150 and up.

But the truth of it is, that changing tickets is generally a lot more work than issuing the ticket in the first place. No matter how high the airline fee, travel agents don’t get any of it; even when agents have commission contracts with the airlines involved. Even with the change fees of $400-$500 fees now charged on many international tickets.

Some agencies charge a planning or advice fee. This is not for issuing tickets, but for what the name implies. Again, it’s not consistent across the industry. Some agents charge a flat planning fee up front. Others charge a “plan to go” fee, which can be applied to the trip if clients actually travel.

While some clients question the “plan to go” fee, but more and more agents are charging it. The reason behind it is simple. While many if not most travelers are honorable, others consider that anything is fair in pursuit of the best price, so they will try to get as much information as possible out of a travel agent, and then contact the hotels involved to see if they can get a better non-commissionable rate direct. Or they will take the same flight itinerary an agent finds and book it direct without a service fee.

And “friends” can be the worst. One woman who remembered me from our children being in after school day care called me last year after “researching fares for weeks,” and told me the best price she had found. I beat it by $150 per person counting a $40 service fee. But when I sent her the itinerary she thanked me, then went to the US Air website, and found the same fare.

So she asked if I would reduce or eliminate the fee. I told her no, and that it was still a $600 savings from her fare. She said okay, but later left me a message saying, “I hate to do this, but that money will buy us a nice dinner in Europe. Suffice it to say I declined to give her free advice next time.

Travel agents have many such stories, which is why the “plan-to-go” fee is becoming more common, especially for new clients.

A planning fee also is almost a requirement for certain kinds of trips, particularly clients looking for individualized itineraries. Travelers who want to book small hotels and inns that may not pay any commission will have to pay this kind of fee. It may or may not seem worth paying a fee for an agent to book a tour, but if that agent figures out a day by day itinerary, with suggested sightseeing etc., then that’s time that doesn’t otherwise get rewarded.

Admittedly, not all agents know what they are doing, so this post isn’t saying that travelers should blindly pay for bad service. Note: If it’s a complicated trip with a significant fees, most agents who weren’t referred specifically should be able to either provide references or offer an initial meeting for free (if they are still taking new clients).

On the other hand, an initial consultation has limits.A “friend of a friend” called last year because his friend had “raved” about my knowledge of England. He had airline tickets already, but when I mentioned a fee, he asked if I could you just do a simple hotel reservation in London for a week or so for his family? While most London hotels will not allow four people in a room, I agreed to do this if he would book through me, which he agreed to do. So I sent him a long email with details on a number of properties that were family appropriate.

His response was to send me a proposed ten-day itinerary in a spreadsheet, asking for details on trains and/or buses for his day trips, asking which cities might be combined in a day, and also asking for sightseeing suggestions and restaurants in each city (including which attractions were open on which days, with hours, etc. to maximize his time). I told him I would have to charge something for that level of detailed planning, and he sent an annoyed email saying that he would just book one of the hotels I had recommended himself.

The short version of all this, the travel agents who were in this business for fun or as a hobby are MOSTLY gone. But the ones that remain, like other professionals, need to be paid somehow to stay in business.

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  • David Z

    Whenever I’m asked what a travel agent does, I tell them they handle specialized or complex trips travelers might not be comfortable or confident doing by themselves; that it depends if time or money is more important for them.

  • dcta

    Well done Janice!

    In my situation, I only charge a “plant to go fee” for complicated, individualized (FIT) bookings…those that will require a number of hours work. Usually it is $150 up front $ 100 of which will be applied to the booking itself if the “client” buys from me. My regular “vacation consultation fee” is $50.

  • Kelly

    “And “friends” can be the worst. One woman who remembered me from our children being in after school day care called me last year after “researching fares for weeks,” and told me the best price she had found. I beat it by $150 per person counting a $40 service fee. But when I sent her the itinerary she thanked me, then went to the US Air website, and found the same fare.

    So she asked if I would reduce or eliminate the fee. I told her no, and that it was still a $600 savings from her fare. She said okay, but later left me a message saying, “I hate to do this, but that money will buy us a nice dinner in Europe. Suffice it to say I declined to give her free advice next time.”

    I am confused I thought you saved her $600?? Yet she still booked on the US Air website?

  • Janice Hough

    I found the fare that saved her $600 from anything she had found and sent her the itinerary, but I didn’t have her credit card to ticket it. She told me she had never thought of US Air to Greece, but went to their website, and sure enough, found the same fare. So that’s when she asked me since she could do it herself at that point if I would waive the fee. When I said no, she booked a duplicate and ticketed it online, so she could save even more…. (And then, though it’s not in the original post, had the gall to call me a couple months later because she was having trouble booking hotels. I politely declined to help at that point.)

  • DaveS

    I don’t see any problems with the system. If you need the help of a professional, you should be willing to pay for it, just as in any transaction. If you’re confident enough to do it yourself, you can avoid the charge. To me the trick is to find an agent who’s really good with some of the more obscure travel do. Once I got a quote from an agent, then spent some time online and found a quote several hundred dollars below his. I called the agent about it and he asked me where I found it. I explained, and he thanked me, presumably now knowing about that option for future clients. A pleasant exchange, but to be honest, I’m not really likely to go to him first next time.

  • PauletteB

    I think the pay-to-go fee is perfectly reasonable. Although I tend to book simple trips on my own, I realize the value of an expert on more complex itineraries. As others have noted, why should I expect any professional’s services to be free?

  • DCTA

    I have group space held on every single sailing of a particular upscale cruise line in 2012. It is kind of unusual, but I do have it. I am able to offer “locked in” rates that will not go up, though if they go down, my clients can have them, AND shipboard credit of up to $900 per stateroom depneding up the actual sailing. In addition, if the client buys from me and that particular sailing is one on which my consortium has group space, this particular line will allow my clients to “double dip” into both groups – they will get my shipboard credit as well as a special shore event, a couple of cocktail parties, and in some cases more shipboard credit.

    I only post this here because I want to point out that this is a very good reason to use a travel agent – you can not get these extras without going through me on this and I think that if you are a regular cruiser on this particular line, it is well worth my paltry fee.

  • John M

    Where I work, we charge a fee for the initial ticket and then if you change we charge a fee for that as well. Our fee for an exchange is $19.00, call Delta to do an exchange and it is $25.00.

    If you do it yourself and you mess up, what are your options to fix the problem? Who do you call? How much of your time does it take to get resolved? How much stress does it cause you? If you book through an agency, yes, you pay a fee however if something goes wrong, you have someone to turn to and who has experience getting things resolved. If you look at what Chris Elliott writes about you will notice that the majority are do it yourself travelers who have gotten into trouble and now need some help.

    There will be times when a customer will beat a price, generally it seems to happen as a result of poor communication between the agent and the client. In my experience, it is not uncommon for the client to say one thing about what is desired and the agent takes that statement as an absolute. As an example, someone will say “I have to be there by 4pm” and the agent will find flights that get there prior to 4pm and not offer a much less expensive flight that arrives at 8pm. The client then goes online and sees the flight that arrives later and assumes that the agent is either ripping them off or is incompetent. It is always important for agents to offer alternatives and to clarify if something is an absolute or if for the right amount of savings, the client will change his or her plans. I think clients also have a responsibility to be clear with an agent as to how much flexibility they have and at what price point. Communication is a two way street and if one side fails to communicate effectively, it makes it much harder for the other side.

  • http://www.mackays-self-catering.co.uk/ Holiday Cottages in Scotland

    Great Written Janice, I agree with you most travelers have no idea about travel agent service charges but your post clears all points of travel before we deal with travel agent.

  • Really???

    I’m flummoxed by this “planning fee” development. I’ve never been charged a fee for the time of a real estate agent or a car salesman prior to purchase, or even a contractor for preparing a bid. My travel agent just requested a fee of $150 per couple to plan a simple cruise – and we just used her to plan a complicated land tour last year. And she got every penny of her commissions. I might see charging a fee for an unknown person, but for a repeat customer? We should get a discount! Not a fee!! And $150 per couple?  How much more time does it take to plan identical itineraries for two couples than one?

  • AnonTA

    Did your travel agent say that she/he would put that $150 towards final payment? because that seems to be the trend I’m seeing – it’s a win win. The travel agent gets some money up front and knows that all of his or her research is not for naught, and in the end, the client does not spend anything additional, since he or she is going to book the trip with the agent.

  • Jsheppard222

    I’m new to the Travel Agency industry.  I was amazed and shocked at how little a travel agency earns for booking a cruise.  I was also a Real Estate agent and the commission structure based on the sale of a $200,000 house versus the commission earned on booking a vacation is quite different.  For example, I booked a cruise for 3 cabins – my commission $90 each cabin — Please remember, this is a business — we need to make money too.

  • Pingback: Why we will no longer waive our plan to go fee for referral clients

  • http://twitter.com/changezkhan Changez

    Aren’t travel agents required to state fees upfront. I’ve used many for international tickets, and what they quoted was the same charge I saw on my CC from the airline. So I presume they worked on commission. Recently I used a new agent for domestic flight, was quoted a per ticket price. Imagine my surprise when I see the airline charges are about $100 less per ticket. That made the agent’s fee about 33 percent. If they had told me upfront I would have thought about it. This way I feel cheated and of a mind to dispute the separate agency fee with my cc.

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