We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Tue 1 May 2007 10:05 AM

Font Size

- Aa +

Airlines and agencies revisit the zero commission debate

The UAE's leading carriers, Emirates Airline and Etihad Airways are unlikely to slash commissions to zero in the immediate future.

The UAE's leading carriers, Emirates Airline and Etihad Airways are unlikely to slash commissions to zero in the immediate future.

But corporate travel companies should be prepared for the inevitable zero commission environment and ensure they are justified in charging their clients management and transaction fees for the services they provide.

Those were the conclusions drawn by airlines and corporate companies attending two insightful forums last month; the inaugural Middle East forum of the Association of Corporate Travel Executives (ACTE) and an open forum hosted by The Business Travel Show and Dnata World of Events.

At the former, top-level representatives of leading international airlines including Emirates, Etihad, Qatar Airways, British Airways and Virgin Atlantic declared their stance on zero commission.

Emirates said it had no plans to cut commissions.

"While most airlines have taken steps to reduce or remove commissions, Emirates has demonstrated its commitment to the trade by ensuring that rates remain competitive and travel agents continue to earn substantial commission payments when selling its tickets," said Hamad Obaidalla, senior vice president, Gulf, Middle East & Iran.

Etihad Airways' regional general manager, Middle East and Africa, Ian Lovelock concurred that agents were "an important distribution channel" and that at this early stage of the national carrier's business development, it needed to keep its distribution "as broad as possible".

"We have chosen at this stage to focus on investing directly into our business, to build up our brand and service proposition within the markets that we operate," he said, but warned: "As with all other airlines, cost control is a major feature of our business. We could, therefore, consider opportunities to reduce IATA commission, subject to the competitive environment in which we operate."

Paul Starrs, commercial manager Middle East for British Airways, the only participating carrier to have slashed commission to zero in the UAE market emphasised that "corporate travel sales are a significant percentage of our market sales".

He said BA would continue "to work with the trade to reflect the strengths in our policy change and revenue benefits for agents".

Andrew Fyfe, regional manager, Middle East and Indian Ocean, Virgin Atlantic, which pays 7% commission said "being new to the market, it's not really our place to set standards".

"As a strategy we usually follow the policy of the national carrier," he added.

At the Business Travel Show/Dnata World of Events forum, Iain Andrew, senior vice president, Dnata Agencies said zero commission was inevitable and would force agencies to add value to their service.

"I am happy to look my clients in the eye and say, "I add value to you". I give you a service, reduce your travel bill and I get paid for that. The complexity [of managing a booking] is often huge for us and we charge a modest fee," he said.

Andrew also called on airlines to explain to the customer where the commission goes.

Arabian Business: why we're going behind a paywall

For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.