STARTING April 1, Cathay Pacific will cut ticketing commission from five to three percent. While the application is still pending approval, travel agents in Hong Kong have already been advised of the changes.
A spokesman from Cathay Pacific said: “Travel agents have long been and remain an important partner for airlines. We will continue to work closely with travel agents to explore new ways of generating business.
“We will continue to review the cost and effectiveness of each distribution channel to ensure the best way to reach out to customers, and one new business model is the introduction of a fee-based scheme.”
Dannia Cheung, general manager, Morning Star Travel Service, said: “As a national carrier, it sets an example for other carriers to follow. We can’t do anything (about it) but try to promote air tickets with hotels and tours rather than just selling tickets.”
Eastrip Travel’s managing director, George Ng, criticized the move as it would further undermine profit. He said: “Nearly half of all existing carriers, such as China Airlines, pay five percent. Cathay Pacific’s decision provides a good excuse for others to trim. I hope the industry will unite to exert pressure on them.”
According to IATA resolutions, airlines have the right to fix their own commission rates, as long as the rate is not zero, explained Joe Ng, general manager, Air Canada.
“Whenever a travel agent provides a service to the airlines, they should pay a fee to the agent. But there is no rule on the percentage, whether front-end or back-end,” he added.
