Avro has announced plans to cut agents’ commission levels by two percentage points.
We have had to do this to ensure we are able to continue to offer the capacity, flexible products and competitive pricing which the customer and retail trade require.
Through all the many recent mergers and acquisitions which have taken their effect on the flight-only sector, Avro, as the market leader, has remained the only constant player.
In the last few months alone, the industry has seen the disappearance of Flights By Inspirations and the consolidation of the Flying Colours and Caledonian flying programmes by Thomas Cook.
The industry has also faced an increase in competition from the no-frills airlines.
The retail trade is able to benefit considerably from the large above-the-line marketing spend of the likes of airlines such as Go and EasyJet, as these campaigns heighten the profile of low-cost air travel as a whole.
It is only by specialist operators such as Avro offering the flexible durations, open jaws, and local departure airports that the high-street travel agent can continue to benefit from this increased awareness.
Our intention is to continue to provide our flight-only programme, offering once again more than 700,000 return seats this year, during a period where you will see our competitors pushing their seat-only capacity towards the inclusive tour sector of their business.
However in order to do this we must make changes.
Historically, Avro has paid very similar commission levels to those paid by the larger, higher margin tour operators, despite the fact that the charter flight-only market is a high volume but low margin market.
By reducing commission levels now, we are trying to readdress this balance and bring back a sensible commission level.
Even so, Avro will still be paying a minimum 10% commission, which is considerably higher than that of our competitor scheduled airlines.
In the long term, perhaps the answer to this is to offer net pricing, although I do not think the industry is really prepared for this move.
Route, range, price and availability all remain principle factors.
There is still much more that could be done to counteract the threat of the direct-sell airlines and operations, and in fact ride on the wave of their promotion.
Avro wants to work side by side with the high-street travel agents in order to achieve this.
Haico van der Steen is distribution director for the flight-only specialist Avro