by Michael Crozier

Created on: January 21, 2008   Last Updated: August 23, 2010

Travel is a $14 trillion industry that continues to grow at astounding double-digit rates largely as result of its ability to evolve and adapt to ever changing socio-economic and political conditions.

The travel world is tough. It's purely natural selection and the survival of the fittest.
Because they've failed to evolve and adapt, traditional retail travel agents have become obsolete and are on the verge of extinction.

Many travel agents and industry observers blame the demise of the travel agency on the Internet and discount online travel reservation web sites. However, the Internet was only the tip of the iceberg and the final nail in the traditional travel agent's coffin.

Over the past 30 years, there been extensive changes within the travel industry. These combined with changes in consumer and business travel trends have radically altered the industry and contributed to the demise of the traditional travel agency.

One of the biggest blows to travel agents was the deregulation of the airline industry and the changes it produced in how airline tickets were bought and sold.

Until the airline industry was deregulated about 30 years ago, the Federal Government controlled every aspect of the airlines including ticket prices and who could sell airline tickets. In the regulated environment, airline tickets could only be purchased directly from the airline, or through an industry approved retail travel agent. The ticket price to the traveler was the same either way since each ticket had a built-in travel agency commission that couldn't be rebated to the consumer or given to anyone but the travel agent.

Most travel agencies relied on these commissions from airline ticket sales for the majority of their revenue. The commissions airlines paid travel agents was also government-regulated and averaged 10%-12% of the ticket price.

Since travel agencies were one of only two ticketing options available, they profited from a government-supported monopoly creating an easy source of passive income. Deregulation of the airline industry stimulated a number of beneficial changes for the airlines and travelers that would force travel agencies to the brink of extinction.

When government control over ticket pricing and marketing ended, airlines made widespread changes to help solve their financial troubles created by the unreasonable demands of union labor, as well as rising fuel and other operating costs.

To cut costs and increase their market share and profitability, airlines

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