European travel agents are portraying their attempts at resisting the rising tide of commission cuts as a case of the biblical slaying of Goliath by David and, in most cases, they are right. But the tables are reversed in the case of low-cost operator Ryanair, which is one of the few carriers sticking to its guns.
PJBrennan, president of the Irish Travel Agents' Association, whose members account for 75 per cent of Ryanair's bookings in Ireland, says his members and UK agents will boycott Ryanair from 1 May if the Dublin-based carrier goes through with its plan to cut commissions from 9 to 7.5 per cent in both countries.
Ryanair, however, is standing firm at 7.5 per cent. Chief executive Michael O'Leary is confident that 'the vast majority of travel agents have no alternative but to continue to support us.' Ryanair is the only carrier on 10 out of its eighteen routes while its main competitor, Aer Lingus, offers higher fares and has no extra available capacity, he says.
O'Leary stresses, however, that while 'reducing loony, expensive commission costs is inevitable', Ryanair will not sever its link with travel agents. The carrier, with a fleet of 12 B737-200s, is the first in the UK market to take the plunge. British Airways, which dwarves the Irish carrier, says it has no concrete plans to cut commissions.
BA will no doubt be monitoring the progress of Ryanair closely but northern Europe's other majors are struggling in the face of concerted travel agency opposition.
SAS is attempting to appease Scandinavian travel agents by postponing the introduction of cuts until September. The carrier was set to reduce commissions from 9 to 7.5 per cent in April.
Peter Zacke, a member of the board of Swedish travel agency association SRF, bemoans SAS' 'disgusting and monopolistic' approach and says SAS took the decision to cut commissions without prior consultation with the agents.
Erik Strand, SAS senior vice president marketing and sales dismisses the complaint. 'You can't have a democratic process over the level of distribution costs - that is our company's business decision.'
SAS' alliance partner Lufthansa, which is also trying to impose joint deals on travel agents together with SAS in other European countries, is using similar delaying tactics. Lufthansa has postponed reducing commissions for domestic flights from 9 per cent to 5 per cent from May until July, but claims this is to enable 'travel agents to get used to the new commission models'.
KLM, meanwhile, is set to go ahead with plans to slash commissions from 9 per cent to 7.5 per cent from May, unless it is blocked by a court ruling. But at presstime KLM and the Dutch travel agents association were struggling to agree on an independent arbiter to advise the court.
Source: Airline Business
