It's been a long time coming, but Emirates Airline has finally rolled out its zero commission policy.
Arabian Travel News contacted Dubai-based travel agencies to find out what they had done to prepare for the introduction of Emirates Airline's 0% commission policy on October 1, 2008.
It's been a long time coming, but the time for debate and speculation has ended and Emirates Airline has finally rolled out its zero commission policy.
ATN polled travel agencies across Dubai to find out what measures they had taken in preparation for this new environment and to gauge their opinions as to how they planned to cope.
The mood, in general, was surprisingly upbeat.
Zero is now a reality so we have to be ready for it and accept it.
"I'm convinced it won't affect our business," said Discovery Travel general manager Ramesh Patnaik.
"Our head will still be on the chopping block dealing direct with the client when it comes to ticket cancellations and service providing; we can apply a service charge because we do these things that clients won't get online."
Agents are fully aware that the majority of airlines that haven't already followed Emirates' zero commission move are likely to do so in the near future.
European carriers adopted the policy in January 2006 - despite protests of disapproval from the angry travel agent community - and since then, other carriers have followed suit.
"Zero is now a reality so we have to be ready for it and accept it," conceded Overseas Travel owner and CEO K A Kewlani.
His mood was echoed by several agents with whom ATN spoke, with an overwhelming number of travel professionals believing the new zero commission environment would give them the opportunity to prove the value of the service they provided.
They appeared fully aware that they would have to add value if they were to justify charging a service or transaction fee.
"Yes, we are ready for it and we can definitely adapt to the situation; this will get the market on its toes," said Amazing Star Travel sales manager Bosco Deniz.
"Everyone has had enough warning so all agencies should be ready; we offer a good service so why not charge a fee?"
Kanoo Travel country manager UAE Sunil D'souza said the agency had been preparing for a zero commission environment for "the last five years" and that it was fully geared to face the reality of the situation. His thoughts on the matter were simply: "quality agencies will thrive".
And he's right - despite this bravado the truth of the matter is that agencies who offer a genuine service will be the best equipped to adapt. The time when agencies were seen by clients as just booking tools is long gone and agents are expected to add value.
Clearly one of the key challenges will be communicating to clients the reason for the service charges.
Century International Travel & Tours business development manager Madan Ramotre believed his company had mastered this art.
"To be honest with you I think 0% commission is a good thing because it can show more clearly that we work for the client and not the airline so we can display to them the value we give them," he said.
While some, like Ramotre, can boast of how they have adapted to this new transparent environment, the fact remains that not all agents will charge the same service fees, which could lead to client confusion, not to mention the dollars - or dirhams - it will wipe from agency margins.
"The problem is that Dubai has always been a discounting market," mused Dubai Travel and Tour Agents Group (DTTAG) manager Leo Fewtrell. "I really don't see how some of the smaller agencies will be able to discount like they did previously. "We've been aware that zero commission has been coming for some time now and the larger agencies are bound to be fine, but it's the smaller ones that will have to be careful."
There will be agencies that will be caught out following the change, but evidence suggests that they will be in the minority.
It is also worth considering that the region's travel industry remains relatively robust and has weathered other difficulties prior to this.
The problem is that Dubai has always been a discounting market.
"The travel industry here is always more resilient than other industries," said EmQuest senior vice president Naz Nizari. "I am sure that will continue to be the case."
The simple fact is that zero is now a market reality. Agents have had sufficient warning even prior to the announcement by Emirates to prepare and those that haven't prepared sufficiently only have themselves to blame.
Happily, the majority of agencies seem to have been energized by the challenge and are ready to face it head on.
"What can we do? We have to carry on," said Sandset Tours & Travel general manager KJ Philipose. "We will make the adjustment that's all; we will be ready for it."
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