LESSON 1.

2
AMERICAN EXPRESS COMPANY AND HISTORY
OF INDIA’S TRAVEL TRADE
INTRODUCTION :
• People were not aware of services of travel agency . Travel agents were appointed for
the purpose of arranging logistics for army personnel or reliefs for war victims .
• They used to work for providing postal and courier services for the government and
some were used to provide time tables for buses and travel information .
• This lesson has highlighted the achievements of American Express who also
introduced the traveler’s cheque and credit cards to the travellers , along with the
history of travel trade in India .
• The company celebrated their 150th anniversary in 2000 as branded credit card and
traveler’s cheque company .
• Today the company is the world’s largest wholesale travel agents and consolidators
with provisions of travel solutions for flights , hotels , car rentals, holiday packages ,
etc .
BEGINNING OF TRAVELLER’S CHEQUE :

American Express is a global company with its unique supply

Chain management system to deliver travel products flawlessly at distant places for
the last one and half decade .
Travellers are also familiar and comfortable in using their services and was a travel
solutions for long haul travellers carrying money for spending in various activities .
Cox’s kings and Thomas cook in uk and American Express company in USA started
travel business for helping the travellers
Among them American Express became popular worldwide for its money order
business , a name when someone thinks of sending money to distance places .
It began to have freight business in 1850 in USA and was an authorised
freight agency of banks in USA to transport small parcels containing currency
notes , bills , certificate and other negotiable instruments.
They stared the business of money order business in 1882 as an agent .
It introduced the world’s first traveller’s cheque in 1891 where the traveller’s
deposited money at the counter and were issued cheque in different
denominations and they can be exchanged in any branches , franchised or
any authorised commercial banks across the USA .
Two benefits:
1. It collected service charge for issuing cheques .
2. The deposited money was invested for earning interest .
It was a huge success and soon started business in other European countries ,
uk
PHILANTHROPIC WORK

• The stranded passengers in European cities during first world war were given
cash against the money order and cheques instantly.
• It helped passengers to spend for routine things specially during that time
• The service enhanced brand loyalty and attachment of people . The public , the
commercial banks highly recognised the credibility
• The British government also engaged the company to supply relief materials to
the British prisoners of war in Germany , Bulgaria, Holland
• The company slowly expanded its business to commercial banking services in
Europe.
DIVERSIFICATION OF BUSINESS :

Cargo and baggage handling and money exchange were the core business until 1915. In
1922 a 30,000 mile world cruise tour connecting and stopping at different countries such as
Cuba, Panama , Japan, etc was conducted .the duration of the cruise was 4 months long .
The company also entered on to the direct sale of bus , train and cruise tickets
The diversification did not bought much changes due to the political turmoil followed by
two world war between 2 decades .after the wars neighbouring countries were engaged for
promoting trade and commerce .
They took the advantage of mass people movement in early 1950s. The first credit card was
introduced in 1958. People took it as a status symbol and hassle free way of purchasing and
paying .
ACQUISITION FOR EXPANSION :
The name of the companies acquired by the American Express include :
• Shearson Loeb Rhodes, first data resources, trade development bank ,
Lehman Brothers , etc.
• All these took place between 1970s and 1980s.
• Due to this the profit reached to 1 billion dollars in 1986.
• There was a setback on the company’s turnover when people were not
using cards due to high rates through Amex cards.
• Due to circulation of Amex cards the company started to maintain strategic
links with airlines , banks , retailers , etc.
HISTORY OF TRAVEL AGENCY BUSINESS IN
INDIA :
Travel agents were not merely selling services they also take part individually or with
group for promotion of tourism destinations.
The countries also started to adopt the innovative business strategies .
Apart from Thomas cook’s organised package tour , there was hardly any
entrepreneur from India who ventured into the business .
The government of India took a slew of measures during the post independence
period to increase tourist traffic to India .it increased the inbound tourist traffic to
India after 1950.
The growth of travel agency business was not so insignificant in the first phase of
post independence period .
PRE INDEPENDENCE PERIOD :
The evolution of modern travel agency and tour operation business in India does
not have a long history unlike Western Europe and North America .
There was no formal and organised travel agency in small cities to handle the
foreign visitors .
They used to conduct world and special interest tours for royal family members
Package tours were regularly conducted to India for British officials , they used
to visit Kashmir and Agra .
The royal visit of Queen Victoria to kolkata after the sepony mutiny in 1858 was
organised by Thomas cook .the connectivity through sea route between India
and the countries in Europe made travel easy , safe, comfortable and affordable.
Peninsular and oriental steamship company in 1878 was used to bring a group of
British tourists to India . They visit to Agra by train to see the Taj Mahal .the group
finally visited the Kashmir valley .
While organising this tour Thomas cook established the Thomas cook and sons
international (Ltd) at Mumbai and kolkata for the inbound operation in 1880.the
eastern princess department was also established in 1887 to cater the travel needs
of Indian royal family members.
A sizeable number of young Indians travelled to England for higher study and
preparation for civil service examinations. at the same time , Indian leaders travelled
to England to participate several round table discussions. Thomas cook booked
arrangements like small cars , horses to transfer tourists from the railway to guest
house with sightseeing tour .
 HINDRANCE WHILE CONDUCTING TOURS IN
INDIA:
• Lack of proper road , bridges , infrastructure, accommodation, money exchangers ,
public toilets.
• Lack of trained tour conductors , guides,etc.
• Untrained staff in the guest houses and other eating places.
• Can drivers without having basic etiquette
Unlike Europe the railway system was much underdeveloped.the airlines had limited
role to work with travel agents and also there were not much connectivity with India
since only allowed for domestic sky .
Due to political turmoil and low engine capacity for long haul journey there were no
international linking
PROBLEMS OF TRAVEL AGENTS :

• Travel agents did it have qualified and trained staff to manage .

• They did not have access to technology
• They were not given credit facility for the reservation of hotel rooms
and airline tickets
• Limited scope for diversification of business.
• Did it consider advertisement or sales promotion or publicity as
increasing sales
THE FIRST INDIAN TRAVEL AGENTS :

• Jenna and co , lee and muirhead India pvt Ltd and Jamnadas & co Ltd were the
first travel agents and they were doing inbound and outbound tour business in
Mumbai . Thomas cook and American Express was taking help of them to do
business in India .
• Mr.J.N Katgara became the pioneer travel agent in India in 1920 to cater the
domestic travel needs .
• He took advantage of business in Mumbai city and ventured into cargo and
courier business
• He concentrated on ticket booking , hotel reservation , package tour , transport
arrangements, etc .
POST INDEPENDENCE PERIOD :

• One event report prepeared by Sir John Sargent in 1945 about the
development of means of travel from nearest railway station, residential
accommodation, travel brochures , etc.
• The formation of tourist traffic branch coordinated with the travel agencies
and tour operators in India. And overseas to promote domestic and inbound
tourism in 1949.
• Establishment of tourist bureau in states and development of tourist centers
and the training of guides were some of the initiatives of the central
government for promotion of tourism .
OVERSEAS AND REGIONAL TOURISM
OFFICES :
• Two overseas tourism offices were opened at London and New York and
regionals tourism offices were also opened in Delhi, Mumbai, kolkata, chennai.
• Later period, 18 overseas tourism promotion offices were aggressive in
exhibiting tourism attractions of India and also maintained continuous dialogue
with the foreign tour operators to participate .
• Air India hosted the familirization tour to several places of tourism interests . It
was a major step of the union ministry of tourism to print brochures with
colourful photographs to create better image to remove perceptions of foreign
visitors about india
CREATION OF TAAI IN 1951:

• A group of 12 leading travel agents formed the travel agents association of

India in 1951. The primary propose was:
1. To protect the interests of those engaged in the industry .
2. To promote its orderly growth and development
3. To safeguard the rights of the travelling public .
MERGER IN INDIAN TRAVEL AGENCY
BUSINESS :
The Jeena and company handled the first group of foreign tourists in 1950.
The company and other two Indian travel travel agencies were merged with the
name they have been recognised as travel corporation of India Ltd (TCL) since it
was formed in 1961.
With the change of foreign exchange rules,Thomas cook India (LTD) was set up
under the companies act 1956 in 1978 as per the foreign exchange regulation act
(FERA) 1973.
The Asian games were hosted in 1952 in India and it attracted a good number of
inbound traffic to India. Majority of travel agencies dealth inbound operations
between 1951 and 1961.
Travel agencies used to face the shortage of vehicles to conduct
sightseeing tours . That is why , all the process took longer .
The report of Ad- hoc Committee on tourism submitted by the Jha
committee in 1963, recommended the role of public sector in the
promotion tourism .
India tourism transport undertaking was set up in 1965.it later merged
with other two tourism public sector and gave birth to India tourism
development corporation (ITDC) in 1966. They provided several luxury
transport facilities at the key destinations .
From the year 1965, there has been a constant increase in the number
of tourists visiting India and international tourists arrivals also
increased.
POST LIBERALISED PERIOD :

The strategy of the ministry of tourism was to position tourism as a national

priority and enhance India’s competitiveness as a tourism destination .
It also took steps for improving and expanding product development, creating
world class infrastructure and drawing up effective marketing plans and
programmes .
CHANGING ROLES OF TRAVEL AGENCY
BUSINESS :
• Pay for performance and override commissions are widely prevalent method of
making the profit that is sustainable for larger travel agents .
• Apart from ticketing , travel agents have focused on travel insurance , hotel
bookings and foreign exchange .
• Package tours have remained to be the core source of business and tour
operations concentrate more on selling holiday packages .
• The travel business in India is largely divided into leisure and business for
inbound and domestic and employment/ migrant travel .
INDIA’S OUTBOUND AND INCLINE GROWTH :

• The outbound market is surging due to the competitive international airfares ,

increasing disposal incomes of consumers and aspirations , disposable incomes
of consumers to travel abroad increasing.
• India expects about 10 million overseas visitors and as outsourcing cities like
Bangalore , Hyderabad dram more business travellers .
• The busiest airports in New Delhi and Mumbai have been modernised to
accommodate more flights and passengers .
THE ISSUES THAT TRAVEL AGENTS SHOULD
BE READY TO FACE :
1. Shrinking revenues from ticket sales
2. Harder to maintain profitability
3. Bargaining power of middle and upper – class customers
The ministry of tourism , government. Of India gave away the national
tourism awards to inbound operators, adventure tour operators, MICE.
They took the advantage of the emerging tourism areas like medical
tourism , rural tourism , cruise tourism and convention tourism .
ROLE OF TAAI AND IATO:

• TAAI has been working on delivery of highest service , building trust and
credibility in the marketplace. And apply technical skills
• Indian association of tour operators (IATO) was established in 1982 in
New Delhi . Has more than 4000 active members and maintains
connections and constant interaction with other tourism associations in
US, Nepal and Indonesia . They regularly present the issues like clogged,
creaking imports , ageing air traffic control systems .