Comment by Jeremy Skidmore: Wise up over commission cuts
I find the furore over British Airways’ decision to cut commissions to 1% quite amazing. The trade papers have been ranting, agents have been threatening to switch-sell away from the airline and, most incredible of all, ABTA aviation board director Sandy MacPherson said he was ‘staggered’ by the decision.
Now all that would be understandable if it was the year 2001, instead of 2003. But unless you’ve been living on Mars for the past two years, how can it possibly be a surprise that BA has decided to cut costs and, consequently, commission?
Forget what BA executives said two years or even 12 months ago about ‘Fresh Approach’. The industry has changed beyond recognition and airlines have much bigger things to worry about than upsetting a few agents. Unless they get their finances in order, they’ll be out of business.
The same goes for plenty of tour operators. After a terrible year, many of them are struggling to keep their heads above water and yet they’re still paying up to 21% in commission. They’re in a different position to the airlines and are unlikely to slash their rates to 1% just yet. But surely they’ll move to only rewarding those who get behind their products.
Will everyone throw up their hands in mock surprise when blanket overrides disappear? I hope not, because it’s going to happen. And think of the long term. Does anyone really think we’ll have the same commission levels in 10 or even 5 years’ time when booking via the Internet is second nature to everyone?
So what of the future for agents? We all laughed a few years ago when BA sent over a Canadian service fee expert to teach retailers how to charge for their expertise. For most agents, it was just too much to comprehend, too soon. But, as I said earlier, the world has changed. Many agents have since tried charging fees and found people are prepared to pay for a service which, when done properly, clearly does have value. And unless the rest can convince their customers that they’re offering something worth paying for, then the future’s bleak.
Switch selling to products that people don’t necessarily want smacks of a short-term desperation.
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