Cruise operators’ attempts to stamp out discounting could breach competition laws, according to an industry lawyer.
In the UK, commercial agreements that set the end price to the consumer are outlawed, yet several cruise lines have started incentivising agents not to discount over the past 18 months.
Swingeing cuts in commission have given agents less scope to discount. But some operators which have left commissions at between 10% and 13% are using a mix of override incentives and threat of losing their deal to police discounting.
Writing in this week’s Travel Weekly, Travlaw partner Sarah Lacy explains that although the law is not totally clear, operators must be wary of a specific regulation enacted in 1987.
The Restriction on Agreements and Conduct (Tour Operators) Order 1987 specifically addresses the issue of discounting.
Abta’s business support manual states the order “makes it unlawful for a tour operator to have a clause in an agency agreement that prohibits the travel agent from offering inducements to the public to purchase the holidays through him rather than another travel agent.
“An operator can’t seek to stop an agent offering discounts. Further, it can’t refuse to deal with a travel agent on the grounds that that agent offers inducements.”
Carnival UK believes its cut to just 5% commission has combated discounting on its own without the need for further inducements.
Giles Hawke, Carnival UK sales director, said: “In our model, 10% [commission] wouldn’t have worked because we believe there still would have been discounting and we don’t believe principals are in a position to stop agents discounting if they choose to.”