Airlines cut payments to Australian travel brokers
Travel agencies are outraged at the prospect of losing multi-million-dollar commissions that will be eliminated by Qantas and other large commercial airlines in the near future.
Earlier this year, Australia’s peak industry body for travel agents said Qantas was the first airline to announce it was reducing agent commissions from five percent to one percent, with a string of other leading airlines, including Emirates, Air New Zealand, Hawaiian Airlines, Singapore Airlines, Cathay Pacific and American Airlines, quickly following suit.
Dean Long, the president of the Australian Federation of Travel Agents (AFTA), told 9news.com.au that the move would put enormous pressure on smaller travel agencies, who are already feeling the effects of the biggest decline in travel since commercial passenger jet travel started.
Mr Long said that the shift would eventually result in a “reduced degree of competition” in the industry, as people would be pushed to purchase their plane tickets directly from the airlines themselves online via the change.
“It’s unjust,” he said emphatically.
This is essentially a cost-shifting strategy on the part of the vast majority of airlines.
Australia’s tourists are now more dependent than ever on travel agencies to advise them through the complicated and rapidly changing coronavirus regulations, according to Mr Long.
Because of the shadow of uncertainty that hovers over international air travel, brokers are now devoting an increasing amount of their time to ticket reservations, according to him.
He said that after tickets are bought, agents return to the booking system numerous times to “touch” a ticket in order to make itinerary adjustments or verify a ticket’s validity. As a result, decreasing commissions in the existing environment was a difficult pill to swallow.
Mr Long described the decision as “very disappointing” and predicted that missed profits will cost Australian travel operators “millions of dollars.”
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In a recent study of its members, the American Federation of Travel Agents (AFTA) discovered that 58 percent of travel agents predicted a return to profit only in the fiscal year 2023-24.
Around 3.5 percent of respondents claimed they would “certainly” go out of business in 2022, with a further 10% expressing strong worries about their ability to continue operating by the end of the year.
According to a recent poll by Finder, there has been an increase in the amount of Australians booking flights via a travel agency, owing to the high and overwhelming degree of bureaucracy necessary to travel during the epidemic.
According to the report, the fear of a trip being cancelled as well as confusion about travel requirements were two of the most important reasons Australians were now more inclined to book via an agency.
When Qantas CEO Igor Kwiatkowski announced the move last year, he attributed it to the difficult circumstances that the airline industry was experiencing at the time.
In a statement, Qantas CEO Alan Joyce said the airline was attempting to recover from “the worst crisis our industry has ever seen.”
According to us, maintaining the status quo in regards to our commission structure is no longer feasible.
According to him, the shift in commissions will assist Qantas in its efforts to decrease different operating expenses by $1 billion per year.
“Given the billions of dollars in additional debt and income lost as a result of COVID, cost savings are critical components of our recovery strategy.”
Mr. Long of the American Federation of Travel Agents (AFTA) said it was “incorrect” for airlines to attempt to convey an image that commissions needed to be lowered today.
Because you only get paid a commission on what you sell, let’s be honest: airline commissions haven’t cost the airline sector a penny over the previous two years.
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This notion that these selections must be made under the worst economic market circumstances that the travel industry has seen in a century is just incorrect.
Cathay Pacific will be the first airline to reduce commissions starting on April 1, with other airlines following suit throughout the course of the year as well.
Commissions will be reduced by Qantas starting on July 1.