Travel Agency and Tour Operations
Travel agencies sell and advise; tour operators assemble and operate. The exam tests that distinction, the documents and systems used, and simple commercial arithmetic.
Functions and terms
- Travel agency: retails travel products, makes reservations, issues tickets and advises on visas and insurance; usually earns commission or a service fee.
- Tour operator: combines transport, accommodation, transfers and activities into a package; takes principal risk and sets the price.
- IATA accreditation lets an agency issue airline tickets on behalf of carriers; a GDS holds availability and creates a PNR.
- FIT is free independent travel; GIT is a group inclusive tour. A voucher authorises a supplier to provide a service.
- Commission is a percentage of the selling price paid to the agent; markup is added to net cost to set the selling price.
Worked example
A tour operator's net cost per person is ₹10,000. It applies a 20% markup. Selling price = 10,000 × 1.20 = ₹12,000. If a travel agency sells it on 10% commission, the agency keeps ₹1,200 and remits ₹10,800. Reasoning: markup is calculated on cost and added; commission is calculated on the selling price and deducted. Confusing the two changes the operator's margin. If GST applies, state whether the quoted price is inclusive or exclusive before calculating.
Traps
Treating markup and commission as the same; calculating commission on cost; forgetting cancellation and refund rules; promising visas the agency cannot guarantee; ignoring payment deadlines.