Travel agency transaction costs in airline value chains – A risk in distribution channels in South Asia?

Abstract

We assess transaction costs incurred by travel agencies in South Asia, an emerging tourism market with exponential growth and a cultural reliance on local (often family run) travel agencies, which are potentially cost-inefficient. Data from 102 semi-structured interviews reveal that transaction costs at the airline–travel agent interface comprise approximately 3–5% of total operating costs, well below our expectations and what traditional theory would suggest. We observe transaction attribute differences and trade-offs (e.g., asset specificity/frequency) across travel agency types, particularly in day-to-day operations. Our results suggest that governance structures such as IT-based distribution systems and global standards (including the New Distribution Capability, NDC) play a moderating role in indirect ticket distribution, thereby making travel agencies and tourism value chains more competitive.