Hal F. Rosenbluth, Chairman and CEO of Rosenbluth International, the world`s third largest travel management company, testified at a hearing of the United States Senate Committee on Commerce, Science and Transportation.
Rosenbluth`s testimony focused on the impact the tragedies of September 11, 2001 had on the travel and tourism industries. Additionally, Mr. Rosenbluth
will put forward a tripartite part plan to reinvigorate and revitalize the business travel industry. The plan will address the need for airlines to reform their fare structure, as well as changes that should be incorporated by corporate customers and the travel management industry itself.
Since September 11th, the travel industry has faced a consistent onslaught of bad news. In the past year alone:
Nearly 13 percent of all travel agencies have closed
Total airline sales have decreased by more than $9 billion, or 17 percent
In August 2002, 104 travel agencies defaulted on their payments to airlines for tickets issued on their behalf, nearly twice that from August 2001.
“While September 11 sent shock waves through the travel industry, the problems that beset travel began long before the horrors of that day. What September 11th did to the industry is accelerate the day of reckoning, and this is now forcing all of us - airlines, corporations and travel companies - to reevaluate the basic structure of how we do business,” said Rosenbluth.
In an effort to address the underlying systemic flaws that beset the travel industry, Mr. Rosenbluth has written a white paper titled A Fare Plan For Airline Recovery (www.rosenbluth.com), which lays out some very simple but challenging steps to help the embattled airline industry restructure in a way that will help generate new revenue and bring the major carriers back to profitability.
“In a word, the corporate pricing structure of the airlines is broken. Airlines won`t publicly state that they are in a mess they can`t get out of, but privately they are quick to agree that lemming pricing has ruled the day for the past two years. Yet, in fear of losing market share, carriers have continued to match discount deals on some programs that are mathematically impossible for corporations to deliver - an irrational business behavior,” said Rosenbluth. “If airlines, corporations and travel management agencies don`t come to their senses, the entire airline industry could crumble under its own weight.”
In the white paper, Rosenbluth also reiterates the company`s stand on encouraging the airlines to complete the process of improving and rationalizing their distribution model. This process began earlier this year with the elimination of agency commissions, and Rosenbluth suggests the airlines follow this up by instituting a transaction fee for every ticket that they distribute directly.
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