Charity sets up agency to reduce travel costs

12 July 2000
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13 July 2000 | Liam O'Brien

The Wellcome Trust has set up its own International Air Transport Association (Iata)-accredited travel agency in an effort to cut out travel-agent costs.

The medical research charity, which has an annual budget of £600 million and a 4.7 per cent stake in pharmaceutical giant Glaxo Wellcome, is believed to be the first company in the UK that is not a travel agency to obtain operating accreditation from Iata.

The airline-owned association does not admit non-travel agents as members. It is believed that the Wellcome Trust, which has a multi-million pound annual travel budget, has set up a stand-alone subsidiary to win Iata's approval.

A spokesperson for the charity confirmed that it had set up its own travel company, but told SM it was too early to comment further.

Loraine Holdcroft, executive director of the Institute of Travel Management, which represents corporate travel buyers, said that other companies were watching the situation closely.

"They want to cut another link out of the supply chain and only use agents when they can add value," she said. "The agents don't really do this with ticketing."

Iata accreditation requires travel agencies to employ staff who have passed its ticketing examinations. An Iata spokesperson said that, at present, there was little it could do to prevent organisations from setting up travel subsidiaries to win accreditation.

But accrediting a non-travel agent company would be akin to selling airline tickets direct and weakens the travel agent network, they added.

Colin Brain, a consultant and former chairman of the Association of British Travel Agents (Abta), told a travel conference in London last month that the practice of setting up a separate travel agency was well established in the US, where it is known as "own licensing", and suggested that UK companies might like to consider this option.

Brain claimed that he had recently been approached by five blue-chip UK companies that were looking to follow the Wellcome Trust's lead.

Besides cutting out commission payments to agents, own licensing could deliver more savings because the agency's employees would be loyal to the company. "Staff will try for the best deal for you, rather than the best deal for the travel agent," said Brain.

UK travel agents saw commission on airline tickets cut from 9 per cent to 7 per cent last year. And from 1 January next year, British Airways will join Ryanair and easyJet in abolishing agents' commission.

An Abta spokesman said that own licensing would only take a small quantity of business travel from the association's members. "Most companies will continue to need the big buying power of large travel agencies and their ability to look around for the best deal," he said.

SMjul2000

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