SriLankan delays zero commission plan on travel agents
National carrier SriLankan Airlines has postponed earlier plans to enforce on April 1, zero commissions on ticket sales by travel agents. The new enforcement date now is July 1.
The carrier made this announcement following a meeting with the Travel Agents Association of Sri Lanka (TAASL) and the International Air Transport Association-Sri Lanka (IATA-SL) on Monday at the SriLankan Airlines office.
The travel industry was also due to meet at an emergency meeting on Friday, March 17 to discuss the circular issued by the airline to end the commission given to agents for ticket bookings. Currently agents get 5 per cent commission for each ticket sold.
During the meeting between the airline and the travel agents this week it agreed to postpone the date of implementation of zero per cent commission levels to July 1, the airline said in response to an emailed questions from the Business Times.
It was noted that the airline would continue to engage with TAASL in further discussions to look into possible revised remuneration, keeping in line with the industry practices. Two weeks ago, travel agents expressed concern to the Business Times over the impending move though the industry had been alerted two years ago by the national carrier. “We are faced with a serious dilemma, not knowing what to do,” said Wilhelm E. Brown, President of TAASL which represents over 300 members, on March 3 adding: “This could cripple the industry.”
Raising similar concerns, Tilak Wickramasinghe, President of IATA-SL, representing 130 IATA-accredited agents, said: “This is very worrying and would force many agents to close down.” Less than 15 per cent of its members are part of large conglomerates who would be able to cushion the blow.
Travel agents have for nearly half a century operated on a commission basis and, lately have added to their portfolio of products ticket and hotel bookings, obtaining visas and travel plans as well. Between 4,000 to 5000 people is employed in this sector.
SriLankan Airlines said it has witnessed a “considerable growth” in online bookings one of the key reasons for this change.
The airline said that commissions form a considerable part of the airline’s cost of sale, which is one of the largest components of the airline’s overall cost.
As a result all airlines are focusing on reducing cost of sale, the airline said adding that “several leading airlines in many countries have already adopted zero percent commission levels, SriLankan Airlines opted for a gradual reduction.”
TAASL was informed of this change by the airline in January 2015, the carrier said.
Currently, 12 per cent of the total bookings are done through the airline’s Internet booking engine.
The industry believes that the airline should have ideally reduced the commission granted to them as opposed to scrapping it altogether. Other carriers offer a seven per cent commission to agents per ticket as against SriLankan’s five per cent. Emirates last month had reduced the commission to three per cent from seven per cent. But airlines like Qatar Airways, Etihad and Thai Airways have already adopted the zero commission framework.