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

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  • Merkert, Rico
  • Hakim, Md Mahbubul

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.

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  • Merkert, Rico & Hakim, Md Mahbubul, 2022. "Travel agency transaction costs in airline value chains – A risk in distribution channels in South Asia?," Annals of Tourism Research, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:anture:v:95:y:2022:i:c:s0160738322000652
    DOI: 10.1016/j.annals.2022.103414
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    1. Ku, Edward C.S., 2022. "Developing business process agility: Evidence from inter-organizational information systems of airlines and travel agencies," Journal of Air Transport Management, Elsevier, vol. 103(C).

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