TROUBLED airline BMI has admitted agents’ commission
payments are likely to be scrapped under its cost-cutting scheme, Project Blue
Chief executive Austin Reid told Travel Weekly there
needed to be a “structural change” in the airline’s distribution model as it
struggles to compete with the low-cost carriers.
The carrier, which currently pays 4% commission, is
seeking to take £100 million of costs out of the business following a loss of
nearly £20 million last year.
Reid said: “Although agents are an effective
distribution channel, they are too expensive. Changes need to be made.”
He added: “We are looking at a number of options. We
could cut commission to 1% like Flybe or we could scrap it altogether, but
costs need to come down and we will choose whatever gives us the best saving.”
News of BMI’s plans come as doubts surface over BA’s
sector payments. BA head of corporate sales Ian Heywood refused to quell
rumours the carrier was planning to scrap the payments. “No comment on that,”
he said. “All I can say is the market moves and we have to evaluate how to move
ABTA and the Guild of
Business Travel Agents have called for urgent meetings with BMI, which will
announce its plans towards the end of the year.