Corporate agent commission cut plea

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Andrew: easier if airlines went to 0%.

Corporate agents have told the region's airlines it would be easier if they all adopted a 0% commission policy.

In a bizarre turn of events, whereby agents rather than airlines are extolling the benefits of a zero commission environment, several GCC-based travel management companies (TMCs) have said a blanket policy would benefit all parties - the agents, the airlines and the clients.

"Process-wise it would probably be easier if everyone went to 0%," said Iain Andrew, divisional senior vice president, Dnata Travel Services, Dubai.

Orient Travel Dubai general manager Asim Arshad added: "It is a little complicated at the moment because some airlines are on zero commission and some are not. It makes things difficult where our back-end software is concerned and furthermore, some airlines that still offer 7% only offer it on a certain part of the fare. It varies from airline to airline."

They were both speaking at a roundtable organised by ATN, which took place during the recent Business Travel Show Dubai and involved some of the region's key TMCs and both regional and international airlines.

But local airlines such as Etihad Airways showed resistance: "So far we have said we will continue to pay commission, based on the market situation here. It has to do with the maturity of the market - we are still an agency run country (in the UAE) - very clearly so," argued executive vice president sales & services Geert Boven.

"The co-operation with agents is still cherished and I can't foresee a change in the short-term at least, but I do foresee it worldwide. The trend towards zero commission is starting worldwide and we will all be following."

HRG head of global consulting Ian Flint predicted that a zero commission environment would come sooner rather than later in the Middle East and would put pressure on the TMC to add value.

Whereas Derin Cameron, the CEO of Alshamel Travel in Kuwait, which is already operating in a 0% commission environment, said the biggest challenge posed by the policy was to regular travel agents, not TMCs.

"The market dynamic has changed so much; we used to be the travel agent for the airlines, because we got paid by the airlines, but now we are the agent for the customers," she said.

Despite his belief that a zero commission environment would be "easier", Andrew argued there would be a backlash by corporate customers if an airline such as Etihad slashed agency payments, "because they, the customers, will take the hit".

Speaking from experience, Michel Oulevay, regional director of partners network MEA, Carlson Wagonlit Travel said "when airlines went to 0% in Europe, what changed in the relationship with our clients - after they got used to it - was that everything we did with them was more transparent. They liked that, but they did complain about paying more."

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