The decision by Rob Gurney to extinguish the HWT, Jetset, Travelscene and Travelworld retail brands and develop a new brand is flawed.

JTG enjoys a massive advantage over its main competitor, Flight Centre, by not directly owning and running the 1700-odd agencies that makes up the retail division of the company. This makes JTG a classic “clip the ticket” company where turnover is all important.

The disadvantage is that JTG has no strong control over the individual offices. It is not a strict franchisor/franchisee, like McDonalds, that enjoys strict standardisation. It is more a loose marketing agreement. It would be fanciful to think JTG could enforce strict standardisation on the network, but this is what Helloworld will need if it is to succeed.

The benefits of merging under one brand have been identified as consolidation of marketing spend, building purchasing power, securing key supplier relationships and the technology provided by Orbitz.

The flaw is that JTG will lose up to 30% of their agents. It will not happen overnight but the one third to half of the currently branded stores will not go with helloworld and will hopefully (from the JTG view) become associated, although with the costs involved it is hard to imagine why.

More likely they will become affiliated offices. The challenge is once affiliated there is no brand loyalty to JTG and they will shop around for the best override deals offered by the various alternatives such as Magellan and Independent.  It will cost JTG to keep them and the competitors are able to offer more attractive deals due to their streamlined operations.

In a “clip the ticket” company once you start to lose turnover there is a vicious cycle where there is less income to use for advertising, less sales and so on.

The move to consolidating the retail brands under one banner will decrease turnover and thus be disadvantageous to JTG.

The consolidation of marketing spend is beneficial. However to which segment of the market will they advertise to? The problem is that the travel market is not homogenous and successful brands differentiate their products to capture different segments of the market, such as Flight Centre with their numerous brands and even Qantas with their Jetstar brand.

The stated benefit of combining the marketing spend under one brand ignores two main things. One is that the individual agencies are able and far better at promoting their own business than a head office and second it is in the best interest of JTG to have as many offices as possible trading and even competing with themselves in the marketplace.

The various brands under the JTG banner can be revitalised with clever, rather than traditional expensive marketing. And what are seen as weaknesses, such as HWT being old fashioned, can easily be finessed, to dependable and experienced for example in HWT’s case.

The stated advantage of building purchasing power is difficult to understand. Surely JTG has been doing this already? If not, you really have to wonder why.

With a reduction in retail stores this will become even more difficult. Similarly it is hard to identify any key suppliers that JTG does not already have a relationship with.

A critical review of JTG was badly needed, although it does seem have a review every time it changes the chief executive,  which is quite often. The retail area is not where they should have looked as it has consistently increased turnover over the past few years.

Why JTG has not been able to make a decent profit, when the travel industry has been enjoying the best three to four  years of trading conditions since the first Gulf War, is inexplicable. The main areas to look at would be the wholesale division, the travel management division and the management structure.

 If the wholesale companies have not adapted to the changing environment of the internet then they should be wound down. They are dinosaurs

 If the travel management division is not making profit on every ticket issued then there is something very wrong. They are in the classic “clip the ticket” environment.

The management structure should be merged as a single JTG management team operating four retail brands. It is absurd to have senior managers and BDM’s exclusively for each brand.

The partnership with Orbitz is the only real benefit from the announced changes.

My forecast is that the Helloworld brand will be established with a marketing blitz lasting a couple of weeks, the JTG network will start to shrink, the poor financial results for 2014 will be blamed on one off restructure costs and by 2015 Mr Gurney will have left with a large payout, a new CEO will be put in place with a plan for a review and major restructure.

 The JTG Board has a lot to answer for to its shareholders, of which I am one.

When your competitors start using adjectives like “brave”, “bold” and “decisive” you should be very worried.

Stuart Barrie is a director of Sydney-based Travelworld affiliate, Academy Travel, and a former Jetset agent of 18 years with Jetset MLC Centre.