Financial Times

Travel trade in a whirl over commission cuts

The already chaotic situation in Sri Lanka's travel industry due to the discontinuation of the Market Development Programme (MDP), has been further aggravated by the reduction of commissions to travel agents, the trade complained last week.

Nihal Perera, Vice President, Travel Agents' Association of Sri Lanka, said that despite representations to SriLankan Airlines CEO Peter Hill and other officials, the airline has decided to trim the existing nine percent commission to seven percent from this month.

Earlier the MDP governed the industry by controlling the selling prices of airline tickets to agents and then from agents to the public with the intention of safeguarding both the public and agents. Since the disbanding of the MDP in July 2002 several travel agencies have closed down while some of them are running at a loss because airlines that have "favoured" agents gave them special commissions, he said.

Perera said that with the problems caused by the Iraq war and SARS, the sales volume of all outbound travel agents have reduced considerably.

With the reduction of the agency commission, the survival of most agents would be difficult and the possible closure of several travel agencies handling outbound travel would result in unemployment in the industry.

He noted that SriLankan Airlines was under the mistaken belief that the commission issue wouldn't have a significant effect on small and medium travel agents.

In addition to the reduction of the agency commission, SriLankan Airlines has created another problem where agents would have to work with the Galileo GDS System in providing automated ticketing facilities.

"Worker acquaintance and installation of this system would take about eight weeks. Most travel agents do not have the facility of having SLA ticket stocks and obtaining them at the counter would cause a four-hour delay," he said in a statement. (QP)