BA draws up proposals to scrap agents’ commission

BRITISH Airways is considering plans to scrap all commissions after the Interim Bonus Agreement ends in March.

The radical plan, which means agents will only be allowed to charge service fees, is being put to retailers over the next two months.

BA has a worldwide annual turnover of £8.9bn and analysts estimate the airline could save tens of millions of pounds by scrapping commission in the UK.

Alternatively, BA has proposed adopting the US model of capping agent payments. In the US, most carriers offer 5% base rate commission with a $100 cap on return international bookings.

BA head of UK and Ireland sales Tiffany Hall confirmed the two proposals had been put to agents.

Hall said BA’s interim agreement, which pays bonuses on top of 7% base commission, could be retained. But this is thought unlikely because the scheme, introduced after previous agreements were ruled illegal, is an expensive option.

Hall said: “The world is changing fast and just taking an old model and tweaking it may not be the way forward.” She said BA could pay different rates to agents depending on their business, but European Commission rules prohibited the use of year-on-year target levels and discrimination between agents.

ABTA’s aviation committee chairman Sandy MacPherson will meet BA at its Heathrow HQ tomorrow. He said he was appalled BA is considering scrapping commissions. “If the new scheme after IBA is less advantageous, there will be blood on the carpet.”

BA reported pre-tax profits in the six months to September 30 of £49m after the disposal of Galileo compared with £385m in the same period last year. MacPherson said it had failed to realise its past poor treatment of agents had affected profits.

n BA plea to agents, page 4

n Scrapping commission to allow agents to charge service fees for bookings. The plan follows a Singapore Airlines decision to axe commissions in favour of fees from October 2001.

n Adoption of US system capping payments. In the US, airlines pay a 5% base commission with $100 cap on international flights, excluding Canada.

n Retention of Interim Bonus Agreement paying base rate of 7% commission with up to three percentage points extra if agents undertake training with BA.

(BAto unveil new scheme in January.)

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