This morning, Delta announced it would discontinue group airfare contracts for domestic flights. Preceding this announcement, travel agencies and tour operators could reserve seats up to 11 months in advance for large groups traveling together.
According to Delta’s website (which has yet to be updated):
Delta Group Specialists customize Delta flight itineraries for groups of 10 or more passengers traveling on the same flight. You get the advantage of competitive fares, flexible ticketing options and dedicated support in booking your group’s travel.
With the new terms in place, Delta is eliminating its current group airfare contracts. Limited details are immediately available, but we know:
-Delta is only offering domestic group purchases in blocks of 9 or less on their website, which requires names and immediate payment (no more group terms and conditions).
-Only travel agencies with a dedicated sales rep are being advised to “reach out to him or her for more assistance”.
With this announcement, groups will now have to book published fares, which will have far-reaching consequences for the group travel industry and especially the student tourism industry.
What does this mean for tour operators?
The inability to book group airfare will impact tour operators’ ability to include airfare in tour packages for organized trips.
If a high school dance troupe hopes to travel to a national competition, they may request a quote 6-8 months prior to travel—well before they know whether their team qualifies for competition.
Travel agents could reserve space with a deposit until the final number of travelers was confirmed. Ninety days prior to travel, agencies could reduce the number of seats being held without penalty or even cancel the entire contract for a deposit refund. Final payment wasn’t due until 30 days prior to travel – giving group travelers time to raise funds and plan for their big trip.
Now, payment and traveler details will be required at the time of booking. This will place travel agents in a more precarious financial situation should the travel group atrophy before their travel dates. Not unlikely, considering almost 40% of group seats go unused. Unless tour operators pass this financial risk onto the clients, they may discontinue offering airfare services at all.
What does this mean for student tour groups?
Student tour groups enjoyed the benefits of group airfare contracts, primarily because it ensured they could travel together and that each student would pay the same price per ticket.
With the disappearance of group contracts, group leaders may have to organize their own group airfare and book published rates, while shouldering the financial risk on their own.
Most online booking portals only allow individuals to purchase 6-9 seats at a time, which means teams may not travel together.
Knowing the final cost of a trip also becomes increasingly difficult. Because of dynamic pricing, the same seat on a flight can cost different prices based on up to 11 different class fares. An online booking engine only displays the cheapest seat available.
With published rates, students 1-20 may get tickets for $400, but by the time you book students 40-50 the class fare may jump up to $800. At best, some students may be expected to pay hundreds of dollars more than their colleagues. At worst, they can no longer afford the trip and the goalie and half-back have to stay behind.
The other alternative? A free-for-all where all students and parents book travel on their own—and student tour organizers hope everyone arrives to the destination on time.
How does this benefit the airlines?
The short answer: it probably saves them money.
With rising fuel costs and taxes, domestic airlines already operate within a small profit margin. When travel agencies hold inventory, there are fewer seats available for purchase by the general public. Plus, airlines need to staff call centers to support the thousands of small groups they process on a daily basis.
It may be a gamble, but the loss of profits from small groups (who may go on to purchase more expensive published fares anyway) may outweigh the cost of labor to run a group desk.
What does this mean for the future?
In a notoriously copycat industry, it is possible that other airlines may follow suit. Airlines have worked for years to protect their small profit margins and insulate their fares.
As professionals in a volatile industry, we will have to continue to do what we have done for years. React to changes, adapt, and brace ourselves for a bumpy landing.
Cait Busscher is a Brand Ambassador for The Air Travel Group, a Business Inc. top 500 company that specializes in group airfare for businesses, sports teams, and student groups. When she isn’t traipsing the world with her husband, she is eating ice cream, practicing yoga, advocating for the oxford comma, and writing a blog only her mom reads (maybe).