The Concierge

Abstract

In 1999, a class-action lawsuit supported by the Association of Retail Travel Agents alleged that more than a dozen airlines had illegally conspired to cut travel agents’ commissions.¹ In 2003, at the end of a long legal battle between the agents and the airlines, the federal judge sided with the airlines, saying that the commission cuts could have come not from collusion but from simple oligopolistic competition and natural changes in the travel market: with the proliferation of sites like Expedia and Travelocity, the airlines no longer needed traditional travel agencies to bring in customers, and as soon as one airline stopped paying commissions, others had every incentive to quickly follow suit.

THE ROLE: These days consumers can perform many traditional middleman tasks themselves: we can book our own travel, find a house in our budget, buy or sell a used car, and manage our own investments. Yet savvy consumers understand that just because we can do something ourselves doesn’t mean we should. Middlemen who play the Concierge role can provide value for such consumers, but only if they understand what customers really need from them and price their services with consumers’ ever-changing alternatives in mind.