Qatar Airways is poised to slash travel agent commissions to zero on home territory, ATN can reveal.
The Qatari national carrier’s general manager, commercial, Ali M. Al Rais told ATN the zero commission policy would be rolled out in Qatar “very soon”.
“We have already introduced zero commission in Kuwait and the agents can’t get over how beneficial it has been for them,” he explained. “They are all charging service fees and say they are making more money than they were when we paid commission.”
Qatar Airways currently pays travel agents in Qatar 7% commission on airline ticket sales, but has already introduced a net fare system Gulf-wide whereby agents are given the net fare and mark-up the ticket price by 7%.
“What we will try to explain to agents is that they must not be afraid to go beyond the 7%, but they must be able to satisfy the client [in order to justify charging extra],” said Al Rais. “The example I always give is that if you buy a Coca Cola in a five-star hotel, you’ll pay 15 dirhams but for that you get service, an air-conditioned lobby and the ambiance. Alternatively you can walk into a corner store and buy the same drink in the same can for one dirham, but the drink is all you get.”
Doha-based travel agents with whom ATN spoke had mixed feelings about the introduction of zero commission in Qatar.
“I think it’s a fantastic idea. We can make a lot more money this way. It will also mean that a lot of unprofessional companies will go out of the window and the quality of travel agents overall will improve,” said N.M Shafiq, operations manager, Regency Travel, Qatar.
“We already charge a management fee for a couple of transactions and services like refunds, so we are prepared for zero commission.”
Shafiq said he expected other airlines to follow suit in the Qatar market and believed a zero commission environment would stamp out discounting practices.
“In Qatar there are about 117 travel agents and about 25 of them have opened in the last three months. Every Tom, Dick and Harry is opening an agency and eating into our market share and undercutting us. They are giving away their commissions (by discounting); some are selling at the net fare and others, below the net fare,” he explained. “If you provide a service, then the customer will pay.”
The director of Doha-based Continental Tourism Network, Thetan Punjani, said his agency was already geared up to adapt to commission cuts.
“We charge customers fees already for some airlines that have already cut commission – primarily British Airways,” he said. “We haven’t benchmarked any fees at 7% – it’s likely to be between 5% and 10%, depending on the client. We need to do our arithmetic to get our formula.”
He said protests against commission cuts would fall on deaf ears and encouraged fellow agents to adapt to this “growing trend”.
But Ahmed Hussain, chairman of Doha’s Tourist Travel Bureau (TTB) said most travel agents were “upset” by Qatar Airways’ zero commission policy.
“Many agencies will close, and so we reject this policy,” he said. Doha-based agents were due to meet to discuss the issue following the busy summer period, he added.
Industry speculators said Qatar Airways’ commission policy could encourage other major airlines such as Emirates and Etihad to follow suit.
But an Emirates spokesperson told ATN that travel agents were “important partners” and that the airline had “demonstrated its commitment to the trade” by ensuring they “continue to earn substantial commission payments” on Emirates tickets.
Geert Boven, executive vice president, sales and services at Etihad Airways, said the UAE’s national carrier would not abolish commissions until its competitors did so.
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