In my view, the airline commission-cutting we have seen in the past few years is a classic case of the airlines going for short-term gain to the long-term detriment of the industry as a whole.
We have all heard the airlines talking about their need to reduce distribution costs, but less has been said about their equal need to maintain an efficient and standard distribution system for their tickets.
They do not seem to realise it, but they tinker at their peril with the International Air Transport Association Distribution System, which has stood the test of time for the past 50 years.
As I pointed out when I had the opportunity of addressing last year’s IATA Tariff Conference on behalf of the European agents, airlines have a vested interest in ensuring that the IATA Distribution System continues to operate.
There is no question that commissions help the airlines control distribution, and less commission will result in less influence with agents, who will play a more dominant role in supplier selection in the future.
So a move away from the standard commission structure will eventually put airlines at the mercy of the major players on the agents’ side.
Furthermore, they will charge their clients what they think is the right price and tell airlines what they are going to pay for their product!
And make no mistake, the agents are entitled to a fair and reasonable commission for their services.
Agents support airlines with massive investments in technology, bonding, training to back up their product promotion and traveller processing, and they need to be rewarded for the added value that they bring to the process.
The levels that were set between 1979 and 1981 – and stood until last year – may not have been as much as we need to run our agencies but they were certainly much less than it would cost airlines to do it for themselves.
It was, and is, a true compromise which works for both sides – so why do some carriers wish to destroy it?
Perhaps it is because they don’t realise the consequences.
If they continue on this route they risk losing control of their own distribution and becoming a commodity priced by the very distributors whose incomes they are now trying so hard to undermine.
So it may well not be the agents, but the airlines that will pay the ultimate price!
Don Lunn is chairman of both Ayscough Travel and the Guild of Business Travel Agents.