How to cash in on LCCs

Saudi Arabia-based low cost carrier (LCC) Sama has extolled the hidden financial benefits for travel agents booking no-frills airlines.

The airline's CEO Andrew Cowen said booking with Sama, which does not pay commission, could earn agents more cash than with a scheduled airline such as Saudi Arabian Airlines, which does pay commission.

"We allow agents to charge a service fee of up to 25 Rials (US $6.69) per passenger per sector. If you add that on to perhaps a one-way fare of 100 or 200 Rials ($26.70-$53.50), that is a pretty hefty commission, which we think makes it attractive to agents," he said.

"In Saudi Arabia, economy fare charges are capped, so Saudia charges at that cap.

"Where agents could provide a lot of value to their corporate customers is to say, look, for your middle management (senior management are never going to fly with a budget airline) we can get fares on Sama for 75% off Saudia prices.

Then they [effectively] earn a commission that is significantly higher."

Sama offers agents two ways to book - through an trade internet portal or through Galileo - but Cowen said agents had been slow to use both channels and did not realise the aforementioned revenue-earning benefits Sama offered.

"We have seen fewer bookings come through the trade than we had hoped. Nevertheless, bookings through the travel agent portal are far higher than the GDS - that reflects the relative clunkiness of the GDS," he said.

"Travel agent bookings - despite it being KSA - are our smallest channel. The biggest by miles is the internet (45% of all bookings).

Print | Email | Discuss this article |

USER COMMENTS (0 COMMENTS)

POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.