INDEPENDENT agents claim the UK is next in the firing
line as Irish retailers declare war on TUI for slashing commission
in half.

TUI’s Irish tour operation, Budget Travel, has sent shock
waves through the trade with news it will cut agency commissions in
the Republic of Ireland and Northern Ireland from 10% to 5% from
January 2005.

As the largest Irish operator – accounting for 42% of the
package market – it says the cuts are needed to compete with
airlines such as Ryanair.

Independent consortia with members in Ireland and the UK believe
this is a trial before similar cuts are rolled out in the UK,
despite denials from TUI UK.

Travelsavers managing director Europe Dominic Burke, responsible
for 102 Irish agents and 50 in the UK, said: “Every agent in
Ireland and potentially the UK could be affected. Budget has thrown
down the gauntlet and war has been declared.

“This is the single biggest threat to the livelihood of
traditional agents. What happened with the airlines pales into
insignificance. There’s no doubt TUI has thought long and
hard about this.”

Already all Travelsavers’ Irish agents have removed Budget
point-of-sale material, cancelled direct debits, and are
proactively switch-selling. They are prepared to stop selling all
TUI products, Burke added.

Meanwhile, Worldchoice Ireland vice-chairman Don Cullinane said
agents could not live on 5% commission. He added service fees would
be rejected by customers and drive more business to Budget
Travelshops.

He added: “It would be naive for UK agents to think this will
stop in Dublin.”

Agents in Northern Ireland are similarly outraged. Worldchoice
regional delegate for Northern Ireland Alan Couser, of
Belfast’s Strandtown Travel, said all 30 members had
de-racked Budget.

“This is the thin edge of the wedge,” he added.

In the UK both Worldchoice and Midconsort expressed concern as
UK operators are already taking a harder line on commissions.

First Choice is reducing base commission to 10% for consortia
agents, while Thomson is refusing to pay overrides to
under-performing members. This week Argo Holidays also reduced
commission by 3%.

TUI UK retail and commercial director Derek Jones said there
were no plans to reduce commissions.

“This is not connected with TUI UK. We’re still paying the
same commission. Ireland is a very competitive market and fuel
costs are increasing.”

But he admitted reducing distribution costs was an issue.
Thomson is already clamping down by removing guaranteed overrides
of more than 10% to all consortia agents.

Jones added: “We’re having constructive negotiations with
consortia. We cannot continue paying overrides if sales are
declining.”

First Choice chief executive Peter Long reiterated his
company’s position following a fallout with

Worldchoice. “There will be a rude awakening for those agents
who expect more commission for selling less. The answer from First
Choice will be ‘no’,” he said.

Worldchoice claims Thomas Cook sales soared by 81% last week
after agents switch-sold away from

First Choice because of the cuts. First Choice sales through the
consortium’s 15 Worldchoice Travel Shops were 90% down.