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The Mole: Thank you for your time today. The industry is going through some turbulent times and we thought it would be valuable for our readers to get your thoughts. Are you familiar with TravelMole?
MH: I’ve been a subscriber to the UK edition for many years.
The Mole. Qantas has announced new commission cuts to agents. You’ve been a fairly outspoken critic in many ways, but also a supporter of the relationship between airlines and travel agents in Australia. Is this the final nail in the coffin in that relationship?
MH: No, I don’t think so. People are saying this is the end of the road. The situation is we are a completely different market than anywhere else in the world, much different from the US and European markets. We’re a long haul destination, people are much more careful about doing that sort of reservation over the internet. As I keep saying to people, if you get stranded in London or New York, you can’t call the internet for help.
So I thing the situation is that agents will always be here, and I think the consumer will ultimately recognize that, particularly in elation to long haul. I think the domestic situation will ultimately go the internet, on a point to point basis. Although, the domestic carriers are telling me that the internet has made no inroads to the percentage of domestic tickets we have sold over the last five years. If I believe what they are telling me, the shift has been from call centre to internet rather than from agent to airline.
The Mole. You say “if you believe”, does that mean you doubt what they are telling you?
MH: Well, I have no evidence to the contrary, and I’ve got no evidence to say we’ve been losing the market share Airlines like Jetstar; they say “you only represent 10% of our sales.” That is the 10% that goes over the Jetstar agent website, right. All of the corporate transactions in the industry are done by corporate agents using a corporate’s credit card booking direct on the Jet star website and charging a fee as a separate transaction.
Some of my major members adopt the same procedure because they don’t want Jetstar to know how much they’re selling of their product. Therefore the 10% situation is an extremely questionable one. I frankly don’t know how airlines can make statements like that.
The Mole:. . What are the lessons from the UK and USA history and what is the message from AFTA to its members?
MH: What’s happened basically in both those markets is that the payment has moved from the front end in the form of base commissions to the back end in the form of overrides and incentives. As you know I am the President of the world body (WTAAA) and at a meeting in London on Nov and all the feedback is that they are doing better now from the back end payments, so it’s more than made up for the commission loss. In actual fact, from what I see, the airlines are worse of now because they are paying more to try and get the business than they were ever doing paying an upfront commission.
I think that trend will emerge here in Australia, no two ways about it
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