A coop for travel agents

For Robert Lim Joseph, the solution was so simple that nobody thought it would work: a cooperative for travel agents who would not otherwise meet the P3 million capitalization required by the International Association of Travel Agents.

"Of the country’s 1,000 travel agents, only 220 enjoy IATA benefits such as lower airline rates and lower -priced travel accommodations," he said. "On his own, a small travel agent cannot compete in such an environment."

At least 500 travel agents agree. They have signed up as members of Travel Cooperative of the Philippines, which filed for IATA accreditation last Feb. 20. "We expect to get our IATA paper by June, at the latest," said Joseph who has been elected TCP chairman.

Patronage

TCP was incorporated in March 23, 2001 with a capitalization of P3.9 million. Because it is monitored by the Cooperative Development Authority rather than by the Securities and Exchange Commission, it is exempt from paying income tax.

Like any cooperative, each member subscribes to one share worth P10,000. Each member also pays a processing fee, which started out at P5,000 and is expected to increase to P20,000 after the IATA accreditation.

At the end of the year, whatever the company makes is returned back to members as patronage on a pro-rated basis. "The more business you bring in by patronizing TCP businesses and products, the more you get back at the end of the year," said Joseph.

TCP operates as a central ticketing and tour package office for its members, who can now fully concentrate on marketing. TCP’s mark up for members is $1 over its net cost, lower than the minimum $10 charged by individual travel agents.

Using a $1.85-million computer reservation system donated by Abacus, TCP books online and delivers the tickets to its nearest member-agent anywhere in the country once its banker, Equitable PCI Bank, confirms payment has been transmitted to the cooperative’s account.

Although TCP insists on dealing in cash with its members, it has internally set a 15-day window to repay the airlines it does business with. This compares favorably to a practice among some IATA agents who take 12 months to refund airlines for unused tickets.

Lucrative

Conservatively, TCP is targeting 4% of the annual business generated by the non-IATA market or about $17 million. Non-IATA members account for 60% of the 1.8 million international tickets sold every year in the Philippines to overseas Filipino workers as well as to Philippine residents, both Filipino citizens and foreigners.

"What we offer airlines and hotels is a good distribution network," said Joseph.

Being a cooperative also gives TCP to other cooperatives which it could tie up. "Even a cooperative of tricycles has its uses. Their members might have relatives who work abroad and would need to buy airline tickets when they come home to visit. They might know another cooperative with a fleet of tour buses that we could do business with," said Joseph, who likes to keep things simple and profitable. - MJGREY