Before the late 1990 s, people bought air tickets from a...

Before the late 1990 s, people bought air tickets from a travel agent. When airline deregulation in the late 1970 s led U.S. air travel to more than triple between 1975 and 2000 , the number of travel agents grew from 45,000 to 124,000 . In the late $1990 \mathrm{~s}$, internet travel sites such as Travelocity, Expedia, Priceline, and Orbitz entered the market. As a result, travel agents began to disappear. Of those travel agents working in $2000,10 \%$ left in 2001, another $6 \%$ in 2002, and $43 \%$ by 2010 (Waldfogel, 2012). Use figures to explain what happened in the market for travel agents.

Key Concepts

Airline Deregulation

This concept refers to the removal of government-imposed restrictions and regulations in the airline industry, which led to increased competition, lower fares, and a surge in air travel demand. The resulting growth in passenger numbers created an expanded market, initially benefiting travel agents by increasing the total volume of travel bookings before technological advances changed the landscape.

Technological Disruption

Technological disruption describes the process by which new digital platforms and innovations, such as online travel agencies, replace traditional methods and intermediaries. In the context of travel agents, the emergence of Internet travel sites fundamentally altered how consumers purchase tickets, reducing reliance on physical travel agencies and leading to a significant decline in their numbers.

Supply and Demand Shifts

The supply and demand framework explains how market equilibrium is established through the interaction of sellers and buyers. In this scenario, the initial deregulation increased overall demand for air travel and, by extension, the services of travel agents. However, the advent of online booking platforms acted as a substitute, shifting consumer preference and diminishing demand for traditional travel agency services, ultimately causing a contraction in the number of travel agents.

Transcript

Please give Ace some feedback