BA delays abolition of commission

20 September 2000
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21 September 2000 | David Arminas

Business travel purchasers have welcomed the decision by British Airways to postpone the abolition of commission payments to travel agents by three months, until 1 April 2001.

The airline said that more time is needed for everyone in the travel supply chain to accustom themselves to the radically new scheme, originally scheduled to start next January.

"There are one or two things to be sorted out, but none of them is insurmountable," said BA's Tiffany Hall, general manager of sales for the UK & Ireland. "This is a fundamental change in the way people work, so we are giving travel agents time to adjust their systems."

The replacement of commissions with significantly smaller flat booking fees will have profound implications for the way companies buy business travel. Many technicalities, such as handling ticket refunds, will have to be resolved, according to Loraine Holdcroft, executive director of the Institute of Travel Management, who welcomed the three-month delay.

"BA is wise to wait until the finer details have been ironed out," she said.

The abolition of commission has major implications for corporate travel buyers because the new fees are intended only to compensate agents for the work they do for airlines.

Agents will now have to charge their clients transaction fees for bookings and all other services. According to one senior travel agent, most companies have agreed a new payment structure with their agency, but have yet to figure out how to pass on the costs internally.

Holdcroft confirmed that organisations were in varying states of readiness for the change. "A significant proportion have made wise moves, some are in the planning process and others are taking a 'wait and see' stance." she said.

However, BA's Hall commented that some clients "are not at all aware of the changes".

Kevin Watts, travel manager for the British Council, said the new date would coincide with the start of his organisation's financial year. But he added: "This does not change the issues for us. Finance officers will no longer get a rebate cheque from their travel managers but a bill. We all have to work out how we will manage our business with only costs, not revenue."

Apart from the UK, Singapore is the only other country where a major airline is abolishing the commission system.


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