Turbo,
I think both are correct. This industry has been transitioning all along, corrolating with the ups and downs of the economy in the various parts of the FSU.
Current reports have petrodollars streaming into Russia at the rate of $500,000,000 per day. Not bad. Second only to Saudi Arabia, as I hear. Plenty of ladies in the FSU willing to abandon their homeland back in the 90's, but not now. Not because all those dollars are quickly filtering down to the proletariat, but that even a small up-tick in optimism will tend to keep most ladies where they are. I think that, for most, abandoning your family, friends, and country, has always been a last resort.
AFA began to change their tours strategy in about 2003, essentially abandoning Moscow as a tour city, and re-focusing new tours almost entirely on Ukraine. And, more recently, AFA is now having to target smaller towns in Ukraine to keep up their inventory of interested ladies. They, as it is known, also create their own problems, by so polluting the local "scene" once they start bringing tours to a new town, that they eventually have to move onto the next destination. Good girls get discouraged, and the predators move in. That might also be part of what has happened with European Connections.
I had a telephone conversation with the owner of EC back in 2003. Not a bad guy, but seemed to realize even at that time that the business was not what he would like it to be. During the convesation, and in an unguarded moment, he admitted that the the industry was "absolutely cut-throat," and that even they felt forced to do things that they didn't want to do. It might have gotten to be too much for them, and they decided to pull out.
Unfortunately for EC, they just didn't have the super-aggressive marketing and technology orientation that A Foreign Affair had. AFA just saturated the media and Internet with advertising and forms of promotion. And it worked. AFA (and to some extent Anastasia), would now, presumably, capture some of the market share that EC would now surrender. That will help AFA for a few more years. However, I think that, for them, it is like the few companies after 1900 that were capturing a larger and larger share of the market for buggy-whips. Other competitors dropping out, and the few remaining ones having a dubious claim to success.
There are also not-well-publicized accounts of AFA also redeploying its capital into other lines of business during the past 5+ years. I wouldn't doubt that the average marginal returns in this industry are diminishing. AFA has barely raised its prices in the last 5 years -- not a good thing, for them. Also, certainly, the 3 owners at AFA are not stupid. They know that the ranks of FSU ladies sincerely and substantially interested in emmigrating are diminising each year, that that the ranks of the party-girls and the opportunistic predators are increasing regularly. My guess is that, for several more years, AFA will be content to attempt to suck up the remaining group tour business, and then, perhaps in about 5 years, also pull the plug on the tours business.
Also, as Internet access in the FSU continues to spread to individual ladies, and their need for an agency to advertise themselves diminishes, agencies and tours will also tend to fall more by the wayside. Likewise, if the remaining honest agencies drop out after getting further and further pinched, economically, predation will subsequently increase, and the whole thing will begin to stink.
There will probably always be some room for local (FSU owned and based) agencies to continue in existence, catering to those otherwise not-so-eligible FSU ladies -- kind of like the Great Expectations thing. But increased dominance by local FSU agencies will probably become more the norm, rather than American-based agency owners trying to churn out a decent living in this industry.
I don't know anybody who thinks that the industry would ever improve (for the agency or tours businesses).
Journeyman
