Travel Trade Operations (Travel Agencies and Tour Operators)
What the domain tests
This domain tests the difference between travel agencies and tour operators, the documents and distribution systems they use, and simple package pricing.
Core rules and concepts
- A travel agency acts as an agent for principals such as airlines, hotels and railways. It earns commission or a service fee, does not usually carry inventory risk, and handles reservations, ticketing and documentation.
- A tour operator creates and sells packages, buys capacity in advance, bears commercial risk, and arranges transport, accommodation, guides and activities. Inbound operators handle foreign visitors; outbound operators send residents abroad.
- FIT means free independent traveller; GIT means group inclusive tour. PNR is a passenger name record. GDS platforms such as Amadeus, Sabre and Galileo distribute airline inventory.
- Key bodies: IATA for airline accreditation, TAAI for travel agents, IATO for inbound tour operators, ADTOI for domestic operators.
- Documentation: passport validity (commonly six months beyond travel), visa, insurance and tickets.
Worked example
A couple wants two nights in a hotel at ₹2,500 per room per night, transport of ₹6,000 for the party and a guide at ₹1,500. Total cost = ₹5,000 + ₹6,000 + ₹1,500 = ₹12,500. Cost per person = ₹6,250. With a 15% markup, selling price per person = ₹6,250 × 1.15 = ₹7,187.50. Reasoning: markup is calculated on cost, not on selling price; commission is a payment from a principal, not the same as markup.
Traps that cost marks
Do not say a travel agency owns the aircraft or hotel. Do not treat GDS as an airline. Do not add commission and markup as if they are identical. Do not forget to divide group costs by the number of paying passengers. Do not quote a package without checking passport and visa validity.