BA slashes travel agents' commission to one per cent

Travel agents and tour operators in Malta are set to challenge a decision by British Airways to slash the commission it pays them from four per cent to one per cent as from July.

Iain Tonna, president of the Federation of Tourism and Travel Agents' Association (Fatta), said the association is intent on challenging the decision because in terms of an IATA agreement with all airlines, adequate compensation had to be given to travel agents.

"The commission is not quantified but one can argue whether one per cent is adequate compensation, especially considering that the cost of tickets was decreasing and hence, so is the income for the tour operators and travel agents.

"If airlines believe that travel agents are not important, then they can try to sell on their own steam and see if they are able to retain their market share," challenged Mr Tonna.

Fatta is still taking legal advice and has requested a meeting with the British Airways representatives in Malta. No date has been fixed for such a meeting yet.

Martin Degiorgio, a travel agent contacted by The Sunday Times, said various airlines had slashed the commission they gave to travel agents in other countries. "This is the way of the world. In some countries airlines pay no commission to travel agents.

British Airways introduced it and other airlines will follow suit. Even Air Malta had considered lowering the commission to one per cent a year ago, but no decision has been taken yet. Usually it's the national airline that starts, and others follow suit," he said.

Mr Degiorgio said he was "not really worried" about the development. The commission used to be nine per cent, then it was reduced to seven, and then four per cent. Four per cent was already inadequate, considering the costs involved.

"Travel agents survive on the service charge of two or three per cent they charge on the cost of ticket and on the tours they organise. An agency serves a customer better than an airline because it gives you options of best flight prices and times, while an airline tries to sell what it has," Mr Degiorgio argued.

He added that efforts to fight the issue in court in other countries had failed.

"This is evolution in the travel sector. You can't stop evolution," he said.