Travel agents in Sri Lanka have raised strong objections over SriLankan Airlines' proposal to drop ticket commission, a move which the trade says could potentially throw many agencies out of business.
In a circular issued to outbound travel agents, SriLankan Airlines has announced that the zero commission policy will take effect from April 1. Agents currently get five per cent commission from the national carrier for each ticket sold.
Two travel agent associations representing in Sri Lanka have called for an emergency meeting on March 17 to discuss a decision. Both associations have also sought a meeting with SriLankan Airlines.
“We are faced with a serious dilemma, not knowing what to do,” said Wilhelm Brown, president of the Travel Agents’ Association of Sri Lanka (TAASL). “This could cripple the industry.”
Tilak Wickramasinghe, president of the IATA Agents’ Association of Sri Lanka (IATA-AASL), raised similar concerns: “SriLankan Airlines could have reduced the commission rather than scrapping it altogether. We have huge costs to pay like the IATA licensing fee, costly bank guarantee charges and also licencing fees to the Civil Aviation Authority of Sri Lanka.”
"This would force many agents to close down," Wickramasinghe added, pointing out that less than 15 per cent of IATA-AASL members belong to large conglomerates who would be able to cushion the blow.
Another veteran industry member commented: “We have been promoting the national carrier through our own communication platforms and hence the airline should be there to protect us, not wipe us out.”
Defending the move, a SriLankan Airlines official, who spoke on condition of anonymity, said the industry had been informed of this plan two years ago. “We are following a global practice,” said the official.
However, industry leaders argue that Sri Lanka is not yet a mature market to enforce zero commissions. “When the national carrier imposes this, other airlines will follow suit,” said Wickramasinghe.
SriLankan is not the first airline to introduce changes to its commission policy. Emirates last month reduced its commission from seven per cent to three per cent, while Qatar, Etihad Airways and Thai Airways have scrapped commissions three years ago.