AGENTS are bracing themselves for another round of commission cuts after a number of airlines in the US cut their payments.
United Airlines sparked off the commission cuts in the US, reducing payments from 8% to 5%. American Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines, KLM and Air France followed suit.
United’s move comes two years after it initiated a cut in the US from 10% to 8%, which all carriers have implemented.
This sparked commission cuts in the UK. Because of United’s move, BA reduced UKrates to 7% from 9% in January 1998.
Long-haul UKand US airlines are under pressure to reduce costs due to poor yields.
United refused to discuss future commission plans. But American managing director European sales Jon Snook said the carrier had no plans to change its payments in the UK “in the immediate future”.
American cut UKrates from 9% to 7% in August to match BA, Qantas and United.
Guild of Business Travel Agents chairman Don Lunn said commission cutting created instability in the market place.
“The ramification is that agents will consolidate into fewer hands and dictate their terms to airlines. Commission cutting is a short-term gain.”
ABTA chief executive Ian Reynolds warned airlines against making further commission cuts in the UK. “It is a tightening of the screw, but it would be risky to carry it out in the UK where the market is different,” he said.
He said the European Commission’s intervention on BA’s commission payments had helped restore reasonable commission rates.
A case against SAS’ decision to drop payments to 4% may also help protect traditional commission rates.
AGENTS are bracing themselves for another round of commission cuts after a number of airlines in the US cut their payments.
United Airlines sparked off the commission cuts in the US, reducing payments from 8% to 5%. American Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines, KLM and Air France followed suit.
United’s move comes two years after it initiated a cut in the US from 10% to 8%, which all carriers have implemented.
This sparked commission cuts in the UK. Because of United’s move, BA reduced UKrates to 7% from 9% in January 1998.
Long-haul UKand US airlines are under pressure to reduce costs due to poor yields.
United refused to discuss future commission plans. But American managing director European sales Jon Snook said the carrier had no plans to change its payments in the UK “in the immediate future”.
American cut UKrates from 9% to 7% in August to match BA, Qantas and United.
Guild of Business Travel Agents chairman Don Lunn said commission cutting created instability in the market place.
“The ramification is that agents will consolidate into fewer hands and dictate their terms to airlines. Commission cutting is a short-term gain.”
ABTA chief executive Ian Reynolds warned airlines against making further commission cuts in the UK. “It is a tightening of the screw, but it would be risky to carry it out in the UK where the market is different,” he said.
He said the European Commission’s intervention on BA’s commission payments had helped restore reasonable commission rates.
A case against SAS’ decision to drop payments to 4% may also help protect traditional commission rates.