Gulf Air axes its agent incentives

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Gulf Air's letter to UAE agents.

Gulf Air has "reluctantly" axed incentive payments to travel agents based in the UAE, Bahrain and parts of Saudi Arabia claiming that they are no longer effective.

"We have stopped payments to various markets around the Gulf, primarily because we have found that these incentives do not work," explained the airline's acting vice president for marketing and sales, Danny Barringer.

"Essentially, these payments are not driving business for Gulf Air."

However, Gulf Air UAE general manager Saad Al Qinni said the recent hike in fuel prices was to blame.

In a letter to UAE agents breaking the news that productivity incentives would no longer be paid he said: "As you all are aware, due to the continued hike in fuel prices, airlines all over the world are facing the problem of increasing operational costs and dwindling profitability and this taunting issue is compelling us to bring down the sales costs to a minimum. To reduce our cost in 2008 we have reluctantly opted to discontinue the practice of incentive payments."

In his closing paragraph Al Qinni stressed that Gulf Air would continue to look after agents' needs and provide them with all the assistance and support they required to promote Gulf Air.

Dnata Agencies senior vice president Iain Andrew said he was "quite disappointed" that Gulf Air had axed payments.

"From an agency perspective, we want to be incentivised. Dnata is the GSA for Gulf Air so we will definitely be speaking to them," he said.

Andrew acknowledged the airline was "going through a tough time" but said abolishing incentives was not the way alleviate this because agents were still a strong distribution channel for all airlines.

In the wake of incentive payment cuts, Barringer also hinted that more commission cuts could be on the cards.

"We are already on 0% [commission] in Oman, Bahrain, Kuwait and Turkey - and we've just implemented it in Jordan," he said.

"We are looking at other markets but it really does depend on the situation in those individual markets - we look for the national carriers to lead the way. My view is that it (0% commission) will be rolled out across the entire Gulf and the Middle East over the next few years."

The upside to this, he added, was that agents charging service or management fees claimed they were now made more money.

"It is also raising standards," he said, noting that agents that charged fees were forced to raise their game to justify charging them.

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