Has it ever happened to you that you have called an airline office after hearing that some travel agency is offering discounted fares on flight booking for particular segments and you expect more from the airline, but are refused the same by the airline? In fact, you might have been informed that their prices are higher than the ones which are given by the agency.
So, what is it that makes the travel agencies offer cheap air tickets to the customers when the airlines are not able to do so. If there is one word which describes this, it is called subsidy. And, this is possible to provide to subsidy only when you are able to earn sufficient profits on the sale of package or the different product mixes to the customers. What are these different product-mixes which can be offered by the agency? Here are some of the combinations which are used most of the time:
1. Flights and hotels: Flights and hotels combinations are the ones which are used most of the times. These are used by the business travelers as well as the vacationers. However, the only cases when the hotels are not to be booked are when there are already alternative arrangements for staying by the people or they do not need to stay at all.
2. Flights, Hotels and Cabs/Trains: In this product combination the customers are allowed total transport solution, right till their destinations. For people who do not want to keep looking for the transport, this type of product-mix is best suited as it prevents them lots of hassles.
3. Flights, hotels, cabs/trains and destinations: For the vacationers who want to see the famous destinations around the world, the package would include every aspect of travel, including the tours to destinations provided in the itinerary. With all these facilities offered by the different product mixes, there is definitely some space for the agencies to offer the discounts on flights.
Many a times, the agencies are under the contractual obligation with the airlines for not providing lower fares than the listed fares of the airlines. This is precisely to prevent the agencies from providing the upfront discounts since these are able to exercise more leverage than the airlines due to extent of reach in different product domains. For this reason, it is also suggest that one shall not look solely for the cheap air tickets, but shall pay attention to the whole package or product-mix which a person is getting.