Inside the World of Travel: The battle of the bucket shops

Rio and Lima for pounds 300 return, Kuala Lumpur and back for pounds 434 - but only if you buy direct. The airlines are muscling in on the discount agents, and in the short term at least, the winner is set to be the long- haul traveller

FOR AN impending trip to Central America, my ticket shows a fare of more than pounds 1,300 - but I paid only pounds 400. A British Airways ticket stub for a flight from London to Entebbe and back is ostensibly priced at pounds 2,000. Yet the cheque stub shows it cost less than a quarter as much. As independent travellers have come to realise, in the airline business the normal laws of economics are turned on their heads, and you save money by cutting in the middle man.

Since the inception of the jumbo jet in 1970, airlines have filled seats by selling tickets through agents at below official rates. In the strictly regulated market of the Seventies, the practice broke the rules. Carriers such as British Caledonian, as well as a number of agents, were heavily fined for selling discount tickets.

Nowadays, almost every airline sells cheap tickets vigorously and legally through licensed discount agents. The backstreet bucket shop has moved to luxurious new premises on the High Street, or the Internet. Everyone wants a share of this expanding market: Thomas Cook, Bob Geldof, Bob Ayling ...

Hang on: Thomas Cook is one of Britain's biggest travel agents. Bob Geldof is a pop singer-turned-proprietor of a discount travel website. So those two have a legitimate interest.

But Bob Ayling is the boss of British Airways. And airlines don't undercut themselves - they get agents to do it for them.

Until now. Having already upset the travel trade by reducing commission from nine to seven per cent, BA is now competing directly with discount agents by taking out press advertisements in the name of a subsidiary company. The ads for Travel Options look much the same as those for a dozen other companies, except for the (very) small print which says that the company is a trading division of British Airways Holidays.

The other difference is that Travel Options has access to lower fares than other companies - and has been selling tickets cheaper than BA's regular telephone reservations service, even though the same staff answer the phones.

The man responsible for the scheme is Colin Whaley, Head of Sales and Marketing for BA Holidays. He says Travel Options is an experiment: "We felt it was worth trialling a different brand on those classified pages where we're competing with the consolidators and the `lates' specialists." The aim, he says, is to find a different way of communicating with customers. Yet the same customer gets treated very differently - depending which number you dial, as I found when I phoned BA's call centre in Glasgow anonymously.

The target ticket was a flight from Heathrow to Kuala Lumpur, travelling out before the end of June and returning in July. Through the airline's usual reservations number, the lowest fare is pounds 594. Not only is this one- third more than the pounds 434 price quoted by Travel Options - it also has stricter conditions attached.

Discount agents are alarmed at BA's move into their territory. One, who asked not to be named, said Travel Options was selling to the public at precisely the same fares that BA sold to him - so he could compete only by making no profit.

"An anomaly", is how the airline describes this case. "We're very sensitive to our agency partners", says Colin Whaley. "The intention is not to undercut what customers can get through a travel agent."

But Bernard Russell, of discount agency Imperial Air Travellers, says "This is the latest example of how they've been undermining the travel trade for years".

While the airline and agents fight it out, the independent traveller needs to know what the effect on fares and choice will be. The unique selling proposition of the discount sector is that fares are cheaper than those sold by the airline. This position will be undermined if British Airways, and others, enter the market using their own, unbranded agents; this technique avoids "cannibalising" the minority of customers who are prepared to pay published fares.

What gives the bucket shop the upper hand at the moment is that they can sell from a range of airlines, while, at present, Travel Options offers only British Airways flights. This could soon change: British Airways will be selling tickets on oneworld, its global airline alliance.

Intriguingly, one of its alliance partners yesterday launched a direct- mail campaign with fares that seem designed to eliminate all competition on flights to South America. The Spanish national airline, Iberia, will take you from London to Rio de Janeiro or Lima for a flat fare of pounds 300 - an unheard-of figure, which no discount agent I talked to yesterday could match. (If you're interested in taking advantage of the deal, call Iberia Direct on 0171-830 0011).

In the short term, the long-haul traveller will benefit from the war that the airlines have declared on the agents. But the bucket shops have served us well for the past three decades, and if they were to be squeezed out by the airlines the industry will be the poorer.

Meanwhile, the Office of Fair Trading may be keen to discuss with BA why the airline cannot make low fares available to all its customers, rather than just those who trawl through the small ads.

Buckets of shops

Last year I spent around pounds 6,000 on airline tickets through discount agents. This is where it went:

Fregata Travel (0171-451 7000): Eastern European specialists.

Hamilton Europe (0171-344 3344).

Journey Latin America (0181-747 3108): excellent fares everywhere south of the Rio Grande.

Quest Worldwide (0181-547 3322): staff are expert at bargain-hunting.

Regent Holidays (0117-921 1711): you may not yet want to go to Kiev, Kaliningrad or Kazakhstan, but ...

South American Experience (0171-976 5511): ideal for convoluted itineraries through strange lands.

Trailfinders (0171-937 5400): some airlines who need to move lots of seats in a very short time will select one agent to work with. Often, it's Trailfinders.