Travel agents furious as airline cuts commission

PUBLISHED : Friday, 27 June, 2008, 12:00am
UPDATED : Friday, 27 June, 2008, 12:00am

Angry travel agents are threatening to boycott Emirates Airline for reducing their commissions amid fears other carriers will follow suit.

Emirates has a relatively small market share in Hong Kong but agents believe the airline's decision to cut commissions paid to agents to 5 per cent from 7 per cent from Tuesday might encourage other airlines to follow.

The cut was announced in a June 20 circular. The airline also said all fares would rise by 6 per cent from July 10.

Civil Aviation Department approval is needed to change air fares but not commission rates. A spokesman said the department had not yet been notified of the fare increase.

The airline flies from Hong Kong to Bangkok and Dubai.

The eight associations that are members of the Travel Industry Council, which regulates local travel agencies, will meet this morning to decide what action to take.

'We don't know what the reason is for cutting commissions, and Emirates only said this was decided by the head office, but a lot of travel agents are very unhappy,' council executive director Joseph Tung Yao-chung said.

'We feel other airlines will follow suit.'

Emirates said it had received a letter from the council and would respond soon.

'Globally, while most airlines have taken steps to reduce commissions, we have demonstrated our commitment to the travel trade by holding our rates,' Emirates vice-president for Hong Kong and China Edwin Wing Chu-lau said.

'However, we have to balance that commitment with the need to remain competitive in these challenging times.'

As airlines struggle to contain costs amid soaring aviation fuel prices, they are desperately exploring ways to save money and increase revenue.

Travel agents are considered a major sales and distribution cost for airlines.

Last month, Northwest Airlines said travel agency commissions would be scrapped from October 1 in Japan.

An industry source said tough action like a boycott was necessary to help prevent a repeat of similar cuts introduced nine years ago.