Travellin' Man

Scott Milne, the second generation at the wheel of Milne Travel, negotiates the bumps and curves of the travel industry

by Craig Bailey

Photos: Jeff Clarke

The September acquisition of Thompson Travel Inc. in South Burlington by Milne Travel is the latest of a handful of recent agency mergers in the Burlington area. Scott Milne, president of the 25-year-old family business, says the trend is an indicator of the increasingly competitive travel industry, the result of decreasing margins offered by airlines. He's planning for the future of his Barre-based business by exploring more acquisition opportunities, establishing on-site branches to serve corporate clients, and looking beyond the Vermont /New Hampshire market for new business.

"Right now there are 33,000 travel agencies in the U.S. There's massive consolidation going on," says Milne. "If you look at Burlington, it's ahead of the curve." American-International was acquired by Child Travel Services last October; New England Travel Service was bought by Accent Travel in December. "The way I count them," says Milne, "there are four agencies left in Burlington, which is not a lot of companies for a city this size.

Marion & Scott MilneMilne Travel American Express operates four full-service offices and two on-site branches to serve corporate clients. Scott Milne serves as president from the West Lebanon, N.H., office. His mother, Marion, founded the business in 1975 and still works at the Barre headquarters.

"We've been looking at Burlington for several years," Milne says. "We've doubled the size of our business in the last three years," not including the Thompson purchase. "We think we're going to double again in the next five years."

According to Marion Milne, Scott's mother, who founded the company with her husband, Donald Milne, repeat business has been the key to the company's growth. "The other day I had a client who I booked on their honeymoon, and now I'm booking them on their 25th anniversary," she says. "I love doing those kinds of things."

Marion's career started in her native New York City, when she began working for a travel agency in 1951. She's already looking forward to 2001, her 50th anniversary in the industry, "if I'm still around!" she chuckles. "I started in the travel business right out of high school as my very first job," she says. In 1957 she married Donald, a native of Barre who was studying law at New York University. The couple moved to Barre in '59, and relocated to Washington five years later. When they founded Milne Travel in 1975, a few years after Marion earned her degree in psychology from Goddard College, it was at the same spot in the Grand Union Shopping Center where it is today.

Three years later, the federal government deregulated the airline industry; it was a landmark for the travel industry. "I would know all the fares by heart," she says of the years before 1978. "There had to be a filing 30 or 60 days before to change a fare. And they stayed pretty much the same."

Nowadays there are more than 25,000 fair and schedule changes a day. Airlines adjust fares in an attempt to fill each seat for the highest price the market will bear. So-called "inventory management," however, counters the agencies' mission to get the best fare for every client.

The increasing complexity of fares changed the nature of the travel industry greatly and led to remarkable advances in computer technology. But it was the airlines' restructuring of commissions that began in 1995 and continues today that tightened competition among travel agencies up a notch. "We never played that game, but one of the ways that a lot of travel agencies really built their business travel business was by rebating heavily to corporate customers," says Scott.

"They take the 10 or 12 percent yield that they're getting from the airline and say, 'Gosh, we can run a profitable business on 7 percent. Let's give 5 percent back to the ... (client).' What the airline said was, 'Let's put that on our bottom line, instead of letting the travel agent kick it back.'" Scott says commission on air business used to be 10 to 12 percent. In the second quarter of 1999 it dipped below 6 percent on average for the first time. "A lot of small agencies are closing, because they just can't make it," adds Marion.

Over the years, Milne Travel, an American Express affiliate, opened and closed many branch offices. Since the Thompson purchase it operates four: Barre, Middlebury, South Burlington, and West Lebanon, N.H. Approximately 50 employees are on the payroll. "Our core business is business travel, group travel, vacation travel," according to Scott. "Those are the three legs of our stool."

Marion spends part of each day at the Barre headquarters, when her duty as a Republican representative for Orange County allows. Politics runs in the family: Donald is clerk of the House and a former state legislator. His father, Henry Milne, was a state legislator who worked as an aide to U.S. Sen. George Aiken. Marion's heart is in serving customers, and she says she's happy to have Scott, who's based in the West Lebanon office, managing the business.

The technology of travel

For all the talk about consumer access to online reservation systems competing with travel agencies, Scott Milne says the bite of the Internet doesn't match its bark. "Airlines that are real focused on their own Web sites," he says, "are doing about 2 percent of their business on the Web." Furthermore, he points out, "A lot of those Web purchases are made through a travel agency.

"The word on teleconferencing is that it actually increases travel," he continues. "It enables customers to efficiently get business up to a level where it requires travel." Milne Travel trains corporate clients to use online tools. "There's a small group of travelers at any company that like the online technology and embrace it." Microsoft developed one of the major, online, business travel tools. "Even at Microsoft, only 15 percent of the travelers use it to book travel," says Milne. "I think that speaks volumes."

-- cb

Growing up in Washington as one of three children, Scott didn't think a career in the family business was in his future. After graduating from Spaulding High School in 1977, he spent a year at UVM before earning a bachelor of arts in political science from the University of Redlands in Redlands, Calif., in 1981.

The following year he moved back to central Vermont to work on Stewart Ledbetter's Senate campaign in Montpelier, where he met the woman who would become his wife, Deborah Kane. When Ledbetter was defeated in the Republican primary, Milne switched gears and took a job as a field engineer in Los Angeles with electronics company Deutsch.

"I was living in Hawthorne, Calif., which is right by LAX and Watts. I remember going around the corner to call my mom," he recalls. "As I'm talking to her I realize my feet are sticking to the ground. This is June in L.A. I look down and there's this dried pool of blood that I'm standing in. I pull the phone away and there's dried blood all over the phone."

He adds,"I liked the thought of getting back here."

His opportunity came in 1987. He and Deborah were living in Phoenix, Ariz., when Milne's parents offered to let him buy into the business by purchasing the company's West Lebanon office. A deal with a vice president at Deutsch allowed him to continue to work for the electronics company after moving to Vermont to work with Deborah in the travel agency.

"I wasn't working for (my parents)," Milne notes. "I was working along side them. So it was my money, my mistakes to make and I think we both benefited from that a lot." In '94 he left Deutsch to concentrate on travel.

Driscoll & Culver"There's not a lot of really good in-bound operators in Vermont like there are in Las Vegas and the Caribbean," says Scott Milne. "We see developing an expertise in the in-bound business as a real opportunity for us." Pictured: Arnold Driscoll and Susanna Culver

Milne says, "I really like corporate travel. Relationships. And I really try to spend a lot of time with the customer. Though one of the real challenges of a growing business is you've got to get better at empowering people and stepping back a little bit."

Milne is sitting behind a desk in a barren office at the business's newest location, the former Thompson Travel on Patchen Road, South Burlington. Recently vacated by Bill Thompson, who will continue to act as a consultant as Milne Travel takes over the business, the space will serve as Milne's office when he's in town.

Tall and clean-cut, Milne's boyish looks give him the appearance of someone younger than his 40 years. If his replies are occasionally guarded it might be that he learned the power of the press at a young age as an intern at a newspaper. When he unknowingly substituted zeros for the letter "O" when writing an obituary -- one growing pain of the switchover from typewriters to computers -- the published result "looked like a joke." Showing a sheepish smile as he relates the incident, he apparently hasn't decided whether it's OK to joke about it, even after all these years.

Though he spends most of his time in the West Lebanon office, which includes an eight-person center devoted to business travel, Milne makes appearances at nearly all the company's offices. He and Deborah, a teacher's aide at Sharon Elementary School, live in Pomfret with their children, 12-year-old Keith and Alisa, 10. The Appalachian Trail, about 200 yards from their home, provides convenient, family entertainment during his off-hours.

The New Hampshire office's proximity to Manchester Airport has given Milne some insight into what effects JetBlue Airways might have on Vermont travel. The low-fare carrier announced Sept. 16 it had acquired highly coveted landing slots at New York's JFK Airport and will serve Burlington International Airport. It will be the first low-cost air service to Burlington since People Express in the 1980s, and will include direct flights to JFK, an option Burlington travelers don't have. Fares are planned to be as low as 65 percent of JetBlue's competitors.

Milne says that in June 1998, when Southwest Airlines entered the Manchester market with approximately a dozen flights a day, "basically all the other airlines matched their fares." He expects the same thing might happen in Burlington, as long as JetBlue announces a substantial departure schedule, which he thinks is unlikely. Furthermore, the outcome of a pending Department of Justice suit against American Airlines for predatory practices against Vanguard Airlines might stifle major carriers' willingness to enter a price war if the suit is settled in Vanguard's favor.

The announcement from United Express that it will replace all its turbo-prop planes with jets by the end of October is more good news for Burlington. Milne says the faster jets will cut travel time to Washington, D.C., from two hours to 90 minutes. More affordable and faster flights out of Burlington are likely to redirect many air travelers who drive to Manchester to instead fly out of Burlington.

While cheaper flights mean smaller commissions for travel agencies, Milne says the increased demand they generate will help balance the scales. With a demanding schedule of growth over the next five years, Milne has his eyes set on clients outside Vermont to throw the scale in his business's favor.

Thirty percent of Milne Travel's business comes from clients outside the Vermont/New Hampshire area. The company has employed two people on Long Island since February to service accounts and scout for new business. "If it works out, I might have 30 people working there," Milne offers. He's also considering establishing a Montreal office, and says he's looking at acquiring two more agencies in Vermont and New Hampshire.

Employees stationed on-site to serve corporate clients are a "core business strategy of ours," according to Milne. The business serves two such clients, BFGoodrich Aircraft Integrated Systems in Vergennes and a pharmaceutical company near New York City. Two or three more on-site offices might open by the end of the year.

Diana McCormick, human resource representative at BFGoodrich, says the in-house office "provides employees with a convenient means of scheduling both business and leisure travel. Scott Milne works very hard negotiating with the airlines, car rental agencies and hotels to keep cost down."

Milne is optimistic for the future, but takes a roll-with-the-punches attitude toward his business. "We've got a lot of balls up in the air, and don't put a lot of resources into them until they start to get something to stick to them," he says of the Long Island initiative. "If it works, great. If it doesn't, we're learning a lot."

Scott Milne's top five tips for business travelers

1. If you fly a lot, try to use one airline

At 25,000 miles flown in a calendar year you'll become an "elite flyer." This opens up preferred seats in coach, accelerates frequent flyer awards, generates carrier upgrades and makes you more "recognizable" at the counter.

2. If your company flies a lot, make sure its business is consolidated with one travel agency

This will enable you to access 24-hour emergency travel reservation services; rate negotiations for air, car or hotel savings; travel policy development; and strengthens your individual and collective leverage with travel suppliers.

3. If you're traveling and in a bind, don't be shy

Airline gate agents have discretion to "break the rules" to a much greater degree than airline reservationists or travel agents. "No" doesn't always mean no, but always choose the airline employee who seems most interested and caring to ask for help. Conversely, your travel agent has greater access to total information than airline reservation agents or counter personnel. When dealing with weather delays, strikes, or mechanical delays use your agent as a key resource in finding alternatives.

4. Be active in choosing the type of aircraft you fly in

Just like cars there are good rides and not so good rides. My current favorites: the Bombardier regional jet for commuter travel; the Airbus 320 for short hauls, although the regional jet is just as good with no middle seats; and the Boeing 777 for long-haul, wide-body trips.

5. Deal with people you trust

At Milne we sometimes say that customers "need to know we care, before they care what we know." This is the key to it all. If your agent, your website, your airline, or your hotel does not demonstrate that it cares about you and your business, give it notice and a chance to improve. If the problem is deep-rooted, move your business to someone else. --sm