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Zero Commission

ARTA Canada president drops a bombshell: No such thing as zero commission

Nelson Alcantara, eTN  Dec 08, 2009

At the recently concluded United Federation of Travel Agents’ Association’s annual congress, held in Kathmandu, Nepal, Mr. Bruce Bishins (from ARTA Canada) has disputed the argument that airlines do not pay commission during the discussion, “Living in the ‘zero commission’ environment."

Mr. Bishins said: “From a North American perspective, the idea of zero commission is really a misnomer. There is no such thing as zero commission in tandem with the United States. That may be the desire of the airlines – not to pay a commission – but the reality is they do, and they are paying it quite well.

“First of all, in Canada specifically, where we have on the domestic front of two major carriers – Air Canada and WestJet - the competition between the two has been so severe that the objective of the travel agency community in choosing which airline to support was made easier by the carriers themselves deciding to pay the agency commission.

“Of course, the commission that was paid, was only paid if the travel agent booked on the airlines’ web site and not through the GDS, because the airline was willing to pay a remuneration, but only if it could save on the distribution cost of GDS fees.”

According to him, it became even more critical this past year when the airlines went to 9 percent commission and then WestJet, which is not typically the market leader, because Air Canada usually is, when WestJet decided that it was going to lower commissions to 4 percent. “That prompted Air Canada to pay, for the first time, a commission on its lowest fares, called Tango fares, which by the way are fares that are not on the GDS; they are only available on the Air Canada web site.”

The ARTA Canada CEO and president added: “So we began a commission war between Air Canada and WestJet, not because of any great pressure from the travel agent community, I must admit – I’d like to take credit for it, but I can’t. The pressure came from the airlines financial turmoil in needing sales from travel agencies, and so they voluntarily entered into a commission battle between the two major carriers, and they are paying a lot.”

Even beyond that, according to Mr. Bishins, any travel agency in Canada can participate in a productivity program based on sales and sales volume to be remunerated. “And so while we have zero commission merely for issuing the ticket, we have lots of commission, if you are willing to commit market share and improve your market share with a carrier.”

He concluded: “To say that we have a zero commission environment is somewhat misleading. Maybe it’s zero-based commission for every agent on every ticket, but certainly not zero-commission based on productivity and bulk.”

ARTA Canada president drops a bombshell:  No such thing as zero commission
Photo by Nelson Alcantara

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