Chapter § 5.05 RETAIL TRAVEL AGENTS
| Jurisdiction | United States |
| Publication year | 2021 |
§ 5.05 Retail Travel Agents
From the standpoint of both consumers and suppliers the retail travel agent has traditionally been the most important element in the marketing of travel services, although the Internet is gaining in importance as vehicle for the marketing of travel services, both through Internet travel sellers836 and consumer self-service.837 The need and desire to travel to new and unknown regions has generated a corresponding need for experts with knowledge of the destination and the best means of arriving there safely and well rested. Knowledge, expertise and consumer reliance are all central themes in the evolving case law underlying the rapidly expanding liability of travel agents for common travel problems including those caused by irresponsible suppliers. Travel agents are increasingly being categorized as fiduciaries838 bound to higher standards of care. The courts have continued to expand the responsibility of travel agents by enunciating numerous duties to:
(1) investigate the financial condition oF. Suppliers; 839
(2) make and confirm reservations; 840
(3) independently verify reservations; 841
(4) inform consumers of any information which would adversely effect the travel contract such as trade press reports on financial instability, 842 a recent outbreak of typhoid fever in the destination country 843 or that tour vouchers are not refundable; 844
(5) inform consumers of the unreliability of charter air carriers 845 or tour operators and the need for travel insurance; 846 and
(6) inform consumers of needed information such as a requirement to have a visa to enter a destination country. 847
Retail travel agents are equally important to suppliers such as airlines, cruise lines, hotels and others, as well as wholesalers and tour operators.
[1] Internet Travel Sellers
Consumer use of the Internet to make travel arrangements has risen dramatically in recent years,848 which now includes the use of iPads, smartphones and apps.849 When Internet travel sellers, such as Orbitz, were first launched they relied upon computer reservation systems (CRS).850 While consumers remain cautious about the reliability of information, the prospect of hidden fees,851 bogus taxes and fees,852 hidden waivers and releases,853 and insecure credit card transactions, travel shopping on the Web is increasing,854 particularly as travel suppliers, e.g., hotels855 and air carriers, and travel sellers, e.g., Cheap Tickets, Expedia,856 One Travel, Travelocity,857 TravelNow and Orbitz,858 offer exclusive fares on their own websites with 24-hour accessibility and retailers continue to develop creative ways to sell travel services,859 e.g., Travelzoo,860 Priceline,861 Hotwire,862 Tingo,863 Guestmob,864 Travelot,865 O.co Travel,866 Flash Res- ervations,867 Site59's "last-minute-air-plus-land-packages."868 Business disputes have arisen between Internet travel sellers869 and between airlines and Internet retailers of discounted travel coupons.870 In addition, some travel websites, such as Farecast.com Farecompare.com, Google.com and Kayak.com,871 allow consumers to search for the best price. Hipmonk.com provides price comparisons with rail transportation.872 Competition between airline websites and Internet travel sellers may make it more difficult to find the best fare.873 In addition, some travel websites provide information only to travel agents,874 and add fees to air fares.875 Supplier websites are rapidly increasing the share of online bookings, particularly with travel agents. While offering many conveniences, the unlimited access of unlicenced, uninsured and irresponsible travel suppliers and travel sellers to the Internet threatens consumers by exposing them to complex travel scams.876 Online travel sellers are subject to DOT regulations.877 However, the Internet, as opposed to selling travel services through travel agents or over an "800" telephone number, may give injured travelers an edge in establishing personal jurisdiction over foreign travel suppliers and travel sellers.878 Online travel companies (OTCs) have been the subject of many lawsuits brought by municipal taxing authorities879 and by consumers for charging bogus taxes and fees880 and misrepresenting price guarantees.881
[2] Travel Agents' Relationship with Consumers
Travel agents interact with consumers in face-to-face transactions and their influence is profound,882 although the information that they provide may or may not be accu- rate.883 With the introduction of Internet travel sellers and reduced airline commissions, the number of affiliated travel agencies has declined.884 The role of travel agents has evolved significantly from a retail "ticket dispenser" to the present day fiduciary in the business of gathering and disseminating information.885 Travel agents are best viewed as information specialists886 or "travel specialists"887 upon whom consumers rely for the provision of accurate and concise information. When marketing studies show that travel agents influence them 30% to 60% of all consumer choices, including destinations, it is clear that travel agents are, primarily, information888 specialists, and, secondarily, order takers and ticket dispensers. The contemporary travel agent is a professional,889 holds himself or herself out as a travel expert,890 and is relied upon much like other professionals such as attorneys, doctors and accountants. Today's traveler has a desire to travel and depends upon the travel agent to ask appropriate questions and make recommendations based upon the consumer's answers.891 Travel agents are paid a commission from suppliers and/or may charge clients a service fee, although there are variations in compensation.892 Priceline, however, has been held not to be a travel agent with fiduciary duties to its customers.893 For example, if the consumer wishes to travel to China it is appropriate for the travel agent to find out if a visa is needed and whether or not the consumer has a visa. A failure to perform this simple inquiry has been found to be negligence.894 If the consumer wants to travel to Haiti it is appropriate for the travel agent to find out what the medical conditions are in Haiti and to advise the consumer accordingly.895 This would also be true of areas of the world subject to terrorism which are reported in United States State Department Advisories,896 the newspapers,897 magazines,898 or trade press.899 If the consumer wants to purchase a charter tour or charter flight the travel agent should point out the riskiness of charters900 and suggest that trip cancellation insurance be purchased.901
Certainly, the travel agent should know whether a supplier can and will deliver before recommending a specific hotel,902 cruise903 or flight904 to the consumer. A travel agent should know what European rental car companies adhere to local safety stan- dards.905 A travel agent should also know whether tour vouchers are nonrefundable before advising his client that the vouchers may be canceled without penalty.906 Even after a travel service has been purchased, the travel agent should make inquiries on the continuing availability of the service907 and report any changes908 or uncertain- ties909 to the consumer910 and help the consumer should the purchased travel services not be delivered.911 All of these duties and obligations are fluid and depend upon the specific needs of the consumer.
[3] Travel Agents' Relationship with Suppliers
Travel agents are retailers of travel services to the general public. Travel agents are paid, for the most part, by suppliers and tour operators on a commission basis. Typically, a consumer will give a travel agent a check for payment. The travel agent will then cash the check, retain a commission912 and pay the remainder to the supplier. On occasion, travel agents may convert or misappropriate ticket stock entrusted to them by suppliers913 or misrepresent actual revenues.914 In most situations the travel agent sells the services of the supplier or wholesaler on a non-agency, non-exclusive basis. This is true for most services with the exception of air transportation, both domestic and international, which happens to be the single largest generator of travel agent sales.
The genesis of the modern travel agent retail distribution system occurred in the 1940s when the Civil Aeronautics Board permitted domestic airlines to form the Air Traffic Conference (ATC) to select and monitor accredited travel agents.915 The purpose of the ATC program was to standardize travel agent qualifications916 and create a "system for the selection and retention of travel agents and a system for the reporting and remitting of ticket sales by travel agents to their airline principals."917
Subject to the continuing supervision of the Department of Transportation, air carriers have formed trade associations to promote and monitor the sale of air transportation. Domestic air carriers make up the Air Transport Association (ATA), while foreign air carriers make up the International Air Transport Association (IATA). The Air Traffic Conference (ATC), a division of ATA through the Airline Reporting Corporation (ARC)918 and IATA919 enter into contractual relationships with travel agents. These contracts, Sale Agency Agreements,920 specify the terms and conditions under which travel agents may sell air transportation to the general public, including obtaining performance bonds.921 Accredited travel agents must sell air transportation at the prices dictated by the airlines typically through global delivery systems (GDS),922 computer reservations systems (CRS),923 although not without significant resistance, particularly over cross bordering,924 back-to-back,925 hidden cities,926 dumping,927 "point beyond,"928 ticketing policies and the imposition of refund penalties.929 Airlines may seek to impose penalties for ticketing violations.930 This is because there is an agency-principal relationship between travel agent...
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