AVRO has become the first seat-only operator to cut agents’ commission in a move taking effect from June 1.
Distribution director Haico van der Steen claims the new rate – which has been reduced by two percentage points – brings the operator more in line with scheduled airlines.
“Historically we have paid a higher level of commission because we are considered to be a tour operator, but the service and product we offer are fairly similar to a scheduled service,” he said.
Under the new structure agents will earn an average of 11% commission compared with an average 13% under the existing system. Van der Steen refused to reveal the maximum agents could earn, but he confirmed that payments will not fall below 10% under the move.
“This still puts us ahead of scheduled airlines,” he said.
The move comes as Avro bids to forge better links with agents. It is launching a new training and incentive scheme to coincide with the launch of its summer 2000 brochure in mid June.
However Van de Steen admitted the cut would anger agents.
“The initial reaction will be one of disappointment but we believe we are a commercial operation and we are trying to make our business stronger. We can come out with stronger competitive prices through this,” he said.
Meetings have already been held with the multiples and letters are currently being dispatched to independent agencies to inform them of the change. Long term the operator plans to introduce net pricing. But van der Steen said: “It is something we have always considered but I don’t think the market is ready for that yet.”
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