DIY 5 25/1/10 12:33 Page 2
knowledge diy & add-ons
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Agent rates
a range of commission options, including
agents setting their own percentage.
A question of
JTA, for example, offers net fares as well as
commission rates ranging from 5-15% for
agents to choose from. General manager
Rachel Braznell says JTA has seen an
increase in agent sales over recent months.
commission
It’s a similar story for Jetset Flights, which
pays a standard commission rate of 10% but
this is flexible and can be changed by agents.
Major Travel, which offers both net fares
and gross prices including commission,
As two seat-only operators scrap commission rates
believes the seat-only market will continue
to be very competitive.
in favour of a net-rates model, Rob Gill asks major
suppliers where they see the future relationship
Margins under pressure
between agents and seat-only
Business development manager Bill Samuels
says: “The bottom line is things change and
all businesses must remodel their activities.
T
he decisions by Avro and Teleticket agents were asking us to do,” says Vinales. Big margins between published and net
to cut commission rates to virtually “We have not really cut the commission be- fares are unlikely to return, and the rise
zero in December look to have cause we have cut of no-frills carriers has only added more
marked a tipping point for the the price and left it at a net rate. With all the pressure on the food chain.”
seat-only market. dynamic packaging this is making it easier Travel 2 also allows agents to set their own
Teleticket and Avro (part of the Cosmos for agents.” margin with a standard rate of 10%.
group) both claim to have made the move to He adds that prices for agents were about Head of marketing Charlie Bateson says:
make their flight prices look more competi- 10% lower than those offered direct to the “We all would like to earn higher margins
tive against no-frills and scheduled airlines, public on its website. He also says that but the way to do so isn’t to alienate the
which do not pay commission to agents. agents who cannot mark up the flights trade by not rewarding them for the work
Avro used to pay around 10% commission themselves can ask Avro to have a percent- that they do.”
while Teleticket offered 10-15%; they now age added to the net fare, which would act Avro’s Vinales points out many agencies
pay 0.1% and 0.01% respectively. They did as their commission. now operate on the basis of earning a set
not cut to zero because of Atol regulations. amount of money from each booking rather
One of the few major players to continue Sealed with a Kiss than a percentage.
to pay traditional fixed percentage commis- At Kiss Flights, national sales manager Abbey “Certain agents are happy with 2% as they
sion is Kiss Flights, which offers agents 10% Thomas says: “Our philosophy has always work on an amount of money rather than
on flight-only bookings. been to provide agents with the best possible the percentage – they are happy to earn £5
price for our seats. or £10 per booking,” he says.
Setting your own rates “We can continue to pay commission and Jetset Flights launched a “minimum earn”
Many agents will now have to get used to stay competitive as our costs remain lower facility last year which means agents can
using net prices, which they can then than our competitors’.” ensure they always earn a minimum
mark-up for the customer – effectively Kiss believes it can continue to extend its amount from every seat-only booking.
setting their own commission rates. services and grow market share despite While margins on seat-only are likely to
Avro’s managing director Michael Vinales fierce competition from no-frills airlines. remain tight, Jetset sales director Adrian
claims that business from the trade has not But with so much pressure on fares, most Smyth points out that agents can still use
been affected by the change, because the operators are now passing on the decision these bookings as a “starting point” to sell
company also dropped its agent prices on how much agents earn from seat-only other holiday elements.
by around 10% at the same time, bookings to the agents themselves.
making prices look cheaper. Flexibility is the key for leading consolida-
“We’re following what tors and many now offer net rates alongside
NET
-RA
TES MODEL
%
O
SION
MMIS
OC
■ What’s your view on seat-only rates for
agents? Email us at
ttgletters@ttglive.com
52 29.01.2010
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