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Travel agents fear their wings may be clipped
View(s):Sri Lanka’s travel trade industry has called an emergency meeting on March 17 to discuss a proposal by cash-strapped SriLankan Airlines to end traditional commissions on tickets, a move which could throw many agents out of business.
In a circular to outbound travel agents, SriLankan Airlines has said the zero commission plan will take effect from April 1. As of now, agents get 5 percent commission from the national carrier for each ticket sold.
“We are faced with a serious dilemma, not knowing what to do,” said a worried Wilhelm E. Brown, President of the Travel Agents’ Association of Sri Lanka (TAASL) which represents more than 300 members. “This could cripple the industry,” he said yesterday.
Raising similar concerns was Tilak Wickramasinghe, President of the IATA Agents’Association of Sri Lanka (IATA-AASL), representing 130 IATA-accredited agents. He said: “This is very worrying and would force many agents to close down.” Less than 15 percent of its members are part of large conglomerates which would be able to cushion the blow.
SriLankan Airlines officials, who declined to be named, defended the move saying the industry had been informed two years ago about this plan and globally online booking is becoming a popular practice. “This is a global practice,” one source said.
For nearly half a century, travel agents — a ubiquitous breed — have operated on a commission basis and in recent years helped clients with handling tickets, hotel bookings and organising visas among a host of issues connected to travel. “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,” said another veteran industry official.
Both TAASL and AASL have invited members for a joint March 17 special general meeting in Colombo to discuss the crisis that would affect an industry which currently employees 4,000-5000 people. “We are seeking the views of the members on what to do,” Mr. Brown said. The two associations have also written to the national carrier, seeking a meeting, and are awaiting a response.
While industry veterans concede that many countries are switching to direct online bookings making travel agents obsolete, they also argue that Sri Lanka is not a matured market to enforce zero commissions, which eventually all the airlines in Sri Lanka will follow. “When the national carrier imposes this, other airlines will follow suit,” Mr. Wickramasinghe said.
While other airlines offer a 7 percent commission to agents per ticket, as against SriLankan’s 5 percent, Emirates last month reduced the commission to 3 percent from 7 percent. About three years ago, Qatar, Etihad and Thai Airways adopted the zero commission framework with industry officials saying this was a policy decision by the national carrier in those countries.
“SriLankan Airlines could have reduced the commission rather than scrapping it altogether,” the IATA-AASL chief said. While the reality is that airline travellers are, more and more, booking tickets online — without going through an agency — travel agents have been adding on new services like helping in visa processing to remain competitive. “We have huge costs to pay like the IATA licensing fee, costly bank guarantee charges and also licensing fees to the Civil Aviation Authority of Sri Lanka,” Mr. Wickramasinghe said adding: “In future it would be difficult to retain staff apart from other impacts.”