BRITISHAirways has dealt smaller agents a major blow by deciding to scrap its Performance Reward Scheme from April 1.
The vast majority of retailers will be left with just the 7% basic commission, while BA will negotiate individual incentive deals with top-performing companies which have marketing agreements with the airline.
ABTAchief executive Ian Reynolds said:”This is a serious body blow to the smaller agent. It’s pretty clear what the message is. BA is going to use the money that used to go into PRS in these marketing agreements, and virtually no independent single branch agent with a turnover up to ú5m has a marketing agreement.
“So, for the majority of agents there is no way they can achieve more than 7% – no matter how loyal they are. This is the difference between making a living and not making a living.”
Reynolds said agents could resort to service fees or switch to carriers who pay higher commission but he admitted other airlines were likely to follow BA in the longer term (see story, right).
“If you look at commissions around the world, the general trend is downwards. In Scandinavia SASis paying 4% with a ú40 cap, and slowly but surely the UKis heading towards this,” he said.
BA claimed its decision was due to market conditions which have made it difficult for agents to hit PRS targets.
Head of sales UK and Ireland Dan Brewin said: “The economic downturn that has affected air travel has not enabled agents to grow their business as much as we had hoped.
“It is not true to say PRS has been a catastrophe. Our UK market share has not been adversely affected.”
The decision to scrap PRS will also help to control distribution costs and comes as BA was due to report third-quarter losses yesterday.
As Travel Weekly went to press, BA’s shares dropped by 11.25p to 381p before the results announcement was made.
Brewin broke the news about PRS to trade organisations on Monday and letters have been sent to all agents.
Agents with marketing agreements have received an accompanying letter telling them that, because of their importance, BA wants to meet with them to discuss “opportunities”.
Norman Gage, business development manager for Advantage Travel Centres, said: “I just wonder, perversely, whether it will be those agents – the big guys – who did not support BA with the PRS who will benefit now because they have demonstrated their ability to turn business on and off.”