Travel News Roundup - August 17, 2008

No Comments » air travel, news, travel

A while back I wrote an article analyzing the finances of online travel agency YTB. My conclusion was that it was better to be YTB than someone who is building a travel agency based on them. It all smelled a bit. Apparently I am not the only one who reached that conclusion as they were just sued by California’s Attorney General as a Ponzi scheme.

Brown Sues To Topple Online Pyramid Scheme

California Attorney General Edmund G. Brown Jr. today announced a lawsuit against YourTravelBiz.com for operating a “gigantic pyramid scheme” that recruited tens of thousands of members with deceptive claims that members could earn huge sums of money through its online travel agencies.

Wireless culture taking to the air

Delta Air Lines announced Tuesday that it will introduce Wi-Fi access on certain aircraft by fall and expand it to its entire domestic fleet of more than 330 planes by next summer. American Airlines and Virgin America previously have said they will launch in-flight broadband Internet services on certain planes by year-end.

TSA to allow laptops to stay in approved bags

There’s a new option for people annoyed at having to take their laptops out of their bags at airport security. The Transportation Security Administration will now allow travelers to leave their computers inside “checkpoint friendly” cases.

Airline industry axes 60m seats

The global airline industry will fly 60m fewer seats in the run-up to Christmas - equivalent to a 7% cut in flights - as the oil spike and economic downturn force carriers to axe services.

Kayak and American Airlines are having a bit of a tif:

Kayak.com drops American Airlines airfares from listings

American Airlines telling you that it will no longer be displaying airfares on Kayak.com or sister site Sidestep.com.

American Airlines spokesman Tim Wagner explained the company’s tiff with Kayak. The airline asked the meta-search engine to bar American ticket purchases through online travel agencies such as Orbitz.com or Cheaptickets.com. As of today, American’s airfares were not available on Kayak.com but flight schedules were still listed.

and in the expected follow up story:

Kayak.com drops American Airlines airfares from listings

American Airlines spokesman Tim Wagner explained the company’s tiff with Kayak. The airline asked the meta-search engine to bar American ticket purchases through online travel agencies such as Orbitz.com or Cheaptickets.com. As of today, American’s airfares were not available on Kayak.com but flight schedules were still listed.

American Airline sues parent of Kayak.com and Sidestep.com

Fort Worth-based American Airlines is suing the parent of meta-search sites Kayak.com and Sidestep.com, saying the Web sites violated its agreement to use the airline’s airfare content.

At issue is whether the sites were allowed to display American fares through third-party sites, including orbtiz.com and cheaptickets.com — where the carrier must pay booking fees — rather than just on www.aa.com.

After Beheading, Greyhound Kills Ad Campaign

Yes, the company offering famously lousy service had just launched an ad campaign with the line “There’s a reason you’ve never heard of ‘bus rage’” when, on a trip from Alberta to Winnipeg, one of its passengers was apparently beheaded and eaten. Suffice to say, they’re doing away with the campaign

and in the strangest piece of news, the conspiracies around the murder that happened at the Olympics:

An American tourist is murdered, and conspiracy theories abound

What would make you stab a 62-year-old tourist to death in the middle of the day and then leap off a 150-foot tower? That’s a question you can’t help puzzling over if you’re in Beijing. What on earth was going on in the mind of Tang Yongming, the 47-year-old man who stabbed two Americans and their Chinese guide over the weekend? Todd Bachman, the father-in-law of the U.S. men’s volleyball coach, was killed in the attack.

YTB and Multi-Level Marketing Travel Agencies

2 Comments » advice, news

A recent post on the Amateur Traveler discussion boards about becoming an online travel agent through a company called YTB led me to look into the company more. I have heard a number of things about them on the web and much of it sounded like too good to be true hype.

It is very hard to do real Internet research on YTB (YTBLA.OB) and a competitor Travelus. It you do a google search on YTB you will probably find some non-authoritative site put up by someone who is affiliated with two of these companies. The information in all of these sites is very suspect in my opinion. The people who setup these sites are doing some very clever SEO (Search Engine Optimization). That does not make what they say true.

The good news is that YTB is not a publicly reporting company so facts about it are available from more reputable sources if you dig deeply enough.

YTBLA on Yahoo Financials

So here is what I have been able to find:

1) It is a multi-level marketing company. That is you get paid more if you sign up other agents. That is not illegal. Avon, Amway, etc are also multi-level marketing companies. But it does mean that it benefits those who get in early versus those who get in now.

2) It just posted a loss in the most recent quarter.

3) Their board of directors does seem to have some people with real experience.

4) They are the 35th largest seller of travel in the U.S. in 2006 by Travel Weekly. source Yahoo

5) In May 7th of last year they reported having 178,000 RTAs (Referring Travel Agents) (SEC filing) against which they paid marketing commissions of $16,136,795 and travel commissions of $1,608,688. That says that the average RTA made $90 in that quarter on the marketing (MLM) commissions and $9 in commissions for travel. Granted we have to assume that some of these were very new agents and that the spread between the best and worst agent was pretty large.

The vast majority of the revenue of the company is the fees paid by the RTAs $17,965,361 in that period vs travel commissions of $2,537,694. So the money coming in is from the agents more than it is from people selling travel.

In the most recent quarter the company made $33,959,388 from the RTAs and $5,328,627 from travel commissions. In addition it made another $3,009,505 form the RTAs in the form of marketing materials.

My conclusion is that it pays to be YTB more than it pays to work for YTB.