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From: [e-mail] (Larry Autry)
Subject: Air Travel FAQ 4/5 Ticket Consolidators
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Summary: Anonymous submission regarding bucket shops.
Keywords: bucket shops ticket consolidators
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Organization: Silicon Graphics, Inc., St. Louis, MO.
Date: Thu, 24 Sep 1992 19:19:21 GMT
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Archive-name: air-travel/bucket-shops
Last-Modified: Thu Sep 24 13:58:38 CDT 1992



................................................................................
This FAQ list is published approximately monthly.  Read the intro in FAQ 1/5 for
a notes on this FAQ list.
................................................................................


                   BUCKET SHOPS AND CONSOLIDATORS

The following information was obtained in April, 1992, from an anonymous
posting, with only minor editing.  There are two separate descriptions,
from two different people, the second being an agent in a bucket shop.
This person didn't reveal an identity for fear of getting in trouble, so
don't post asking for the address of this bucket shop.  This posting is
very long but answers many questions about international ticketing.

--description from first anonymous source--

"Consolidator" and "bucket shop" are sometimes used interchangeably, but
aren't exactly the same.

Consolidators are agencies that have discount agreements with the
airlines.  In most cases, especially with the U.S. and other big airlines,
consolidators are wholesalers who sell only through retail agencies, not
directly to the public.  (I recall seeing a list in the Consumers Report
Travel Newsletter of some consolidators who deal directly with the
public.  But retail customers will, of course, be charged more than
wholesale customers.) In any case consolidators do NOT offer retail
service.  If you want a straightforward round-trip ticket, know what
airline you want to go on, and exactly what dates, and that that airline
has the best route and price, fine.  But of course many itineraries
aren't like that, and most people need a retail agent's help to figure
out what's the best ticket for them.

Any retail travel agent can buy tickets from consolidators, and most
U.S. agents who do significant international ticketing are familiar
with some of the biggest consolidators for major carriers.  Bucket shops
are retail agencies that specialize in knowing the full range of
consolidators (every airline has many consolidators) and in knowing other
techniques of fare construction, importing tickets, etc. for discount prices.

Consolidators basically fall into three categories:

(1) Wholesale only -- no retail sales or advertising.  (You may have seen
their names, however, in the validation box of tickets bought through a
retail agency.)  These are the consolidators most local travel agents
know about.  They generally deal only with round trips originating in the
country where they are based, and seem to be most common in the U.S.
They advertise heavily in the travel agency trade press.

(2) Specialty agencies selling both wholesale and retail.  Frequently an
agency operating and retailing tours to a particular country will have a
discount agreement with the airline it uses for its tours (generally the
national carrier of the destination) and will also sell wholesale tickets
on that airline.  One reason they do the wholesale business, even if
their markup on wholesale tickets is very low, is to boost their volume
of production (sales) with the airline, as many discount contracts are
contingent on a specified sales volume, and/or have year-end bonuses or
additional commission rebates based on sales threshholds.  Sometimes they
are "general sales agents," that is, official representatives of an
airline (usually a small one) that doesn't have service or its own office
in a country.

(3) Bucket shops.  Many bucket shops negotiate their own deals directly
with the airlines for routes where they can't get good (or any) discounts
from (1) or (2).  They use these deals for their own retail customers,
and frequently also to other bucket shops.  (Sometimes they negotiate
these deals specifically to be able to export the tickets to bucket
shops in other countries, as when a Singapore bucket shop gets permission
to discount tickets originating in the U.S.)  Bucket shops' own deals
tend to emphasize one-way tickets, which are essential for constructing
around the world tickets and which often aren't available for other
consolidators.

Enough on consolidators.  As for getting tickets at the last minute:
Airlines wait until they have a good idea how full their planes will
be (based on advance booking levels) before they decide how deeply they
need to discount their tickets to consolidators to fill their planes.
So consolidator contracts with the airlines are subject to change,
usually several times a year, and generally forbid sales of tickets for
travel commencing more than a few months after the sale.  Verifying
prices with vendors around the world, and then importing tickets, can
take a couple of weeks (unless you want to pay extra for air courier
service).  So  you can't expect to get the best price, or to get your
tickets, many months ahead (except for times like Christmas, when prices
are set and planes fill up many months in advance).  On the other hand,
it shouldn't take more than a couple of weeks to get your tickets from a
reputable, efficient agency -- barring complications.  (The most common,
and justifiable, complication, especially with a complex ticket, is that
one of the rates has changed and a different source or fare construction
has to be found.  Customers find this hard to understand, but it isn't
always possible to call or fax an oversees -- or even a domestic --
supplier to verify every fare in their wholesale tariff, which is always
subject to change, before quoting a price to the customer.)

As for what to do, I wouldn't think of buying an international ticket
from a neighborhood travel agnet, even if I told them to try to find a
consolidator fare.  Depending on your itinerary, try either an agency
specializing in that destination and/or a bucket shop.  You'd be
surprised how often local agents, when they have a customer for a weird
destination or routing (especially around the world) simply buy the
tickets from a bucket shop and mark them up to the customer.

You'll get the best price if you shop around, but remember that rating an
around the the world itinerary can take an hour of work (for which the
agent is paid nothing if you end up getting the ticket elswhere).  So
don't be surprised that the fare isn't in the computer and can't be given
off the top of the agents head; the agent will give only a very rough
estimate of the fare unless you make clear that you are really serious
about getting the ticket from that agency if the price is right.


--description from a travel agent who chose to remain unnamed--

Bucket shops serve a limited and specialized subset of the air ticket
market, and are mostly concentrated in a few world cities:  London,
Singapore, Bangkok, Hong Kong, and San Francisco.  Much smaller and less
competitive bucket shop marketplaces include New York, Athens, and
Nairobi.  It's worth going far out of your way to deal with a bucket shop
-- the overwhelming majority of travel agents don't even try to compete
with bucket shop fares.  For that matter, most agents couldn't construct
the sorts of routings the better bucket shops specialize in (especially
customized around-the-world itineraries) at ANY price.

How do they do it?  For one thing, simple specialization.  Almost all air
tickets sold in the U.S. are domestic round trips (the majority) or the
simplest international round trips (mostly to resorts in the Caribbean,
Mexico, or perhaps Europe).  I haven't the faintest idea what the fare is
to Cancun, and our agency policy is to tell callers flatly, "I'm sorry,
we don't handle domestic travel." On the other hand, most agents have
never booked a ticket to Moscow in their life, and might get one
around-the-world customer a year.  I get round-the-world enquiries every
day.  "You need to go to Manila, Hong Kong, Moscow, and Paris?  No
problem.  Of course, no airline flies directly from Hong Kong to Moscow,
so the route and the fare would be as follows..."

How do they get their fares?  That's an extremely complex question, which
I can't answer fully both because (1) it would take too long and (2) I'm
not supposed to divulge trade secrets (although my boss, so far as I
know, isn't on the net -- and there is surprisingly little overlap
between the hacker community and even the most skilled CRS [computerized
reservations system] users, perhaps because travel agents are mostly
women and hackers mostly men).  Even a sketchy answer requires some
explanation of fares in general:

International airfares are set by interantional agreement and regulated
by the airline cartel, IATA.  Most international airlines are closely
related to, if not directly owned by, their national governments.  Most
governments in turn have an interest in protecting the profits of their
national airline, and the IATA fares are artificially high.  IATA rules
officially prohibit discounting, and in some countries these rules are
actually enforced -- one reason some countries have no bucket shops
whatsoever (although tickets originating in those countries can often be
bought in other countries, if you know where to look).  All official fares
are "published" either in hardcopy (the OAG) or electronically to the
CRS's.  Most important, only published fares are shown in any CRS.  That
works OK for domestic U.S. fares, since with deregulation domestic
carriers can publish pretty much any fares they want, and change them at
whim.  If they want to lower the fare, they lower the published fare.  So
getting the best domestic fare means learning how to search whatever CRS
the travel agent uses (the major ones are pretty comparable on
completeness of published fare listings), figuring out which seats on
which flight itineraries it applies to, booking seats accordingly, and
driving the ticket directly from the CRS (using its "auto-price"
capability).

Bucket shops subvert the airline cartel conspiracy against discounting in
various ways.  Airlines can contract with wholesalers ("consolidators")
to sell tickets at less than published fares.  The rules on routes,
stopovers, seasonality, etc. for these tickets are governed by the
contract, not by the rules for any published fare.  Sometimes bucket
shops contract directly with airlines and sometimes they buy and resell
tickets from consolidators.  Since the goal of the airlines is to get
each passenger to pay the most they are willing to pay, airlines try to
discount tickets in such a way as to fill otherwise empty seats rather
than divert full-fare passengers to cheaper tickets.  Frequently, they
restrict how consolidator tickets can be advertised, such as forbidding
mention of the name of the airline or allowing the discount fare to be
promoted only to a particular geographic or ethnic market.  It's common
for tickets to be most heavily discounted in a place far (even thousands
of miles) from where the ticket either begins or ends, so as not to
depress the primary market.  If a consolidator fare is TOO successful,
the airline will raise the fare or terminate the contract.  Many
conolidators won't deal directly with the public, and net fare tariffs
are confidential.  One of the most important skills for a bucket shop
agent is having a feel for the wholesale ticket market.  It's one thing
to ask your local agent to try to buy you a consolidator ticket.  It's
quite another for the agent to know who, and where, has the best price
for what you want.

Other consolidators, and some retail agencies (especially those with a
large volume on one airline to one destination, such as those serving
specialized ethnic markets) receive more than the standard commission on
some or all of the published fares of a certain airline to certain
destinations.  This is permitted by IATA rules.  The "incentive,"
"override," or "bonus" commission is officially forbidden to be rebated
to the customer, but of course is.  (In fact, bucket shops often end up
with a smaller ppercentage commission than normal agencies.)  Figuring
the actual price to the passenger with such commission deals is
particularly complex, since one must satisfy all the conditions of both
the published fare and the commission deal.  Net fare contracts usually
have much simpler rules.  (For example, the cheapest ticket may be issued
at a higher fare that also has a higher commission.  For this reason, and
because net fare tickets usually carry the "full" fare as their official
price, the "face value" of a ticket need bear no relation to the price
paid.  All else being equal, the HIGHER the face value of the ticket the
better, since in general high-value tickets are more readily changed,
rerouted, etc.)

Finally, the bucket shop business is global.  Your local travel agent
might buy from a domestic consolidator, but they WON'T import your ticket
from overseas, even if that would be much cheaper.  The major bucket
shops in SFO, HKG, BKK, SIN, and LON regularly buy from each other.
Costs of DHL and international faxes are less than the wide international
variations in ticket prices.  Theres a lot more to it (especially in
constructing routes and connections, which no CRS does well for complex
international routes), but in many ways a bucket shop is simply a ticket
broker, buying for its retail customers on the world wholesale ticket
market.  Most bucket shop tickets, if you inspect the validation, are not
issued by the bucket shop itself.  If you already knew exactly where to
buy them, you could often get a slightly better price directly.  But the
odds are you couldn't find the best deal for yourself -- the whole system
is DELIBERATELY stacked against just that.

Round-the-world tickets are the epitome of the bucket shop agent's art.
Don't be fooled by published around-the-world fares.  They restrict you
to the extremely limited routes of just one or two airlines.  Only rarely
are they the best deal; to put it another way, only the rare itinerary
can be shoehorned into such a fare without mangling it.  Most around-
the-world itineraries can be best and most cheaply ticketed as a series
of one way tickets from point to point.  Constructing a round-the-world
fare requires both deciding at what points to break the circle into
segments and getting the best price for each segment (where each ticket
may actually, with stopovers, cover several legs of the journey).  On top
of that, most people aren't sure when they start planning a round-
the-world trip exactly what stops they want, or in what order.  Good
round-the-world agents are rare, even in bucket shops -- but your average
travel agent doesn't even know where to begin.

As for bucket shop reliability, it varies.  Caveat emptor.  They tend to
be wheeler-deelers, and of neccessity they cut their margins thin.  Find
out how long they've been around.  Check them out with the Better
Business Bureau.  See if they belong to the American Society of Travel
Agents (which has its own arbitration system).  Go to their office in
person, if you can.  If it's worth it to your peace of mind, pay by
credit card so you can refuse the charge if you don't get your tickets.
You'll probably be surcharged 2-5% for using a credit card, but its
simple, cheap, and effective insurance.  (One thing not to believe is
favorable references.  Except for complete frauds, even rip-off agencies
have satisfied customers.  The test is what they do when things go
wrong.)  For what it's worth, I have yet to encounter a completely
fraudulent bucket shop, and most are pretty reliable.  But you have to
recognize that you can't expect the best service at the lowest price.
It's especially important to remember that fares change constantly and
that no estimate is certain until the tickets are actually issued.
(Amazingly, airlines claim the right to increase fares even after tickets
are issued, althought they never do.)



--
Larry Autry
Silicon Graphics, St. Louis
[e-mail]