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Are ACTA's supplier partnerships a conflict of interest?

  • Air
  •   05-19-2015  10:37 am

Are ACTA's supplier partnerships a conflict of interest?

David McCaig, president/COO, ACTAAs the Association of Canadian Travel Agencies (ACTA) prepares for its annual general meeting later today, the question of supplier partnerships is expected to be a hot topic.

The organization, which promotes a mandate to advocate on behalf of travel agents, has been facing criticism for a business model that some view as a conflict of interest.

Suppliers, from airlines to tourist boards (among others), make a financial commitment to work with ACTA in exchange for opportunities to connect with its database. As a result, advertisements and promotions are distributed on their behalf and visible throughout the ACTA website.

According to the organization, these partnerships are “built on a foundation that is committed to working in the best interest of the travel agency community.”

“Being agent-friendly is a number one criteria for our Partner Program along with the ability to assist ACTA with education and providing us with insight into those sectors of the industry,” ACTA tells PAX. “Going into partnerships it is clear that in instances where there may be a difference of opinion, ACTA's position is always in the interest of the travel agent.”

But some members have been questioning whether or not said relationships are silencing the organization from carrying out its mission, while others add it puts ACTA in a position to compete for dollars that could go directly to the major consortiums and chains they represent.

In regards to the advocacy concerns, the most notable case was ACTA's response to commission cuts from two airline partners, Air Canada and WestJet, in March 2015. 

When Air Canada eliminated pay-outs on Tango fares and cut the reward on Flex, Latitude and Business Class bookings, ACTA President David McCaig responded in his weekly President's Podium message, saying: “We are discouraged to learn that those agents who deal with a large percentage of customers whose focus are Tango bookings will have to come up with a plan to up sell and if they don't, will see a drop in their agent revenue from Air Canada. Do I think the agency community will come through this with resilience? Of course I do. If you sell a lot of AC, take advantage of the GDS earning opportunities.”

When WestJet followed its competitor’s move, the response was largely the same.

Compare this to a similar situation in 2009 when both airlines cut commissions – ACTA immediately lobbied for members and in effect, Air Canada and WestJet reinstated commissions to seven per cent.

The industry's frustration with ACTA's non-committal response to the most recent cuts was only enhanced when weeks following, they announced an expanded partnership with Air Canada, which will see both organizations working together to develop a robust Learning Management System designed for the agency community.

Still, the organization maintains that all partnerships are made in the best interest of travel agents.

Such relationships are par for the course when it comes to trade associations. The American Society of Travel Agencies also engages in supplier partnerships, but as President Zane Kerby told TravelMarketReport, “ASTA has a different relationship with our supplier community than ACTA. ACTA is able to offer specific supplier programs that are normally a benefit of consortia programs here in the U.S. and are not allowed to be offered by non-profit entities here.”

In an interview with PAX following the story, Kerby said "ASTA's board of directors is made up of 16 travel agents and agency owners, so we have a very clear primary constituency. Any time there’s any question about where we should fall on a particular issue, it’s very simple: we’re here to represent the travel agent. We obviously have supplier members, but they are not our primary constituency.”

As for the financial contributions these partnerships offer ACTA, the organization says it could survive financially without them, “but we do not hide the fact that their contributions assist ACTA in fulfilling our mandate of providing effective leadership for our members in the areas of advocacy and lobbying, communications and public relations, research and education and training. Without these partnerships ACTA membership dues would be at risk of major increases.”

Whether or not there is an approach that ACTA could adapt that could eliminate this perceived conflict while still benefiting the organization is yet to be seen.

What are your thoughts on ACTA’s supplier partnerships? Please share in the comments below or e-mail newsroom@paxnews.com.

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