One of the primary reasons for the demise of commissions was the desire by airlines to reduce their distribution costs. They also felt it would take out an intermediary, bring them closer to their end customers and give themselves a competitive edge. Their strategy was not resisted by corporations who saw it as a way to commoditise this vexing and rather antique type of purchasing, or at least make it far more transparent. After all, experience showed them that stripping a product down to its component parts makes it far easier to negotiate lower prices. There were mixed feelings amongst travel management companies. It varied around the world from despair and anger to others who saw it as an opportunity to survive and thrive whilst their peers faltered under the pressure of having to justify their role in the supply chain.
The end result has proved to be fascinating and I am not sure if any of the key stakeholders got what they wanted out of it. In fact I suspect a number of people out there would rather things went back to the "good old days" of airlines picking up their distribution tab and TMCs either providing a "free" service or even sending their clients cheques. It also brought into question again the need for a TMC at all and whether technology and direct supplier linkage was ready to take over their role. It has clearly been proved as not the case, as stakeholders realise that the simple process of making a booking is a tiny part of what TMCs do and most of the rest cannot be automated or ignored. It has become a dog-eat-dog jungle out there as each part of the supply chain jostles to pass on cost in some kind of financial merry-go-round whilst taking rather unsubtle stabs at each other. Very little cost has been taken away completely by technology, and meanwhile everyone is ignoring the true movers and shakers who are the travellers themselves.
So, let me take you back to the question. Did the removal of commission do anyone any good? Whilst agreeing with the overwhelming logic of it, I would venture that the answer is "very little" and would back this surmise as follows:
Airlines
What have they achieved from it? Well firstly they have walked straight into a place they do not want to be (especially now) which is a commoditised market. Instead of being judged on service, they are being drilled on price and they are neither ready nor experienced in dealing with it. As a result, they are dumbing down their prices and products to fight both the no frills airlines and the corporate buyer. Their seats have become pricing units, yet they still doggedly plug away selling and promoting themselves like they always have. They have recently started imitating their lower cost competitors by introducing "extras" as a way of increasing income. Sure, they have reduced their distribution cost ... but at what price? And to cap it all, anything they saved originally has been lost in price negotiation with corporations.
TMCs
The biggest impact of this seismic change was felt by this principal intermediary. In some ways they had been on a gravy train and the only true threat had come when competing with each other. All of a sudden their income dried up and, instead of paying clients they had to send bills. When you send bills to people more used to cheques, you have to both justify them and explain your value in the chain and, in the main, they have not done this very well. After all, if it has been free in the past, it is hard to put a high value on it, and most travellers and their employers think it is only about making a booking--which they can do themselves online. Still, nobody has been able to lucidly and compellingly explain to the whole supply chain why a TMC has a high value that cannot be replaced elsewhere. Until they do, TMCs will continue to scratch around being perceived as a costly and perhaps unnecessary intermediary being nailed on low transaction costs and offsetting them with extras.
Corporations
One might come to the conclusion that corporations have got the best from the demise of commission, but I am not so sure this is the case. Sure, they succeeded in initially getting fares down--but frankly it took very little time before they crept back up to pre-cut levels. On top of this, they are now picking up practically all of the TMC costs including those that should logically still belong to the airlines. Despite paying for TMCs, it is still the airlines that control the key rules of what they are allowed to do through their association (IATA), resulting in corporations about to receive shorter credit periods and possibly higher card merchant fees. All of the above could be manageable if corporations could control their budget holders and travellers, but most of them cannot. They understand even less than their employers about the intricacies and nuances of pricing, services and value when it comes to travel, as their view is completely simplistic and understandably mercenary.
Conclusion
In the modern world, paying commission to intermediaries is almost quaint and definitely outdated; however, it seemed to serve a purpose in business travel. I say this because I struggle to see how anyone has truly yet benefited since commission went in travel. In fact, I have noticed recently that it is creeping back in the guises of marketing agreements and varying types of corporate deals. The latter is because now that corporates don't get cheques, they cannot find means to pay their TMCs as their travellers baulk against fees. I think the industry should give itself a range of options. It is time the top brains from across the chain should sit down together, stop trying to wipe the other out, and logically come up with some viable options. I know there are various bodies like the UK ITM who are looking into this already, and I applaud them for doing so. Otherwise, we can simply let this metamorphosis continue and the "last men standing" will probably find the solution themselves.