• Saturday, March 02, 2024
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BusinessDay

Airlines force travel agencies to refocus ticketing business over zero commission policy

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The total zero percent commission policy on ticket sales which has been adopted by almost all airlines may be forcing travel agencies to re-think their strengths and ways to remain in business, as many of them (agents) now devise means of repackaging the ticketing business.

Changing operational environment, high cost of doing business, among other reasons as claimed by the airlines, were responsible for the policy as they (airlines) have swung to full ticket sales on their websites.

At the onset of ticket sales business globally, airlines both international and domestic were known to be offering about 10 percent commission on a ticket sold to a customer but was gradually reduced to 1 percent and now zero percent due to overheads cost.

“To make matters worse for the travel agencies, most large airlines began to encourage travelers to bypass travel agencies and book their flights with the airlines directly. The airlines claimed that they are not trying to run out travel agencies, but they have to cut costs.

“They also saw a potential to cut cost dramatically by selling tickets over the web. There are currently many campaigns underway to sell super-discounted tickets over the web with the sole interest of drawing customers to the airlines’ web-page”, a travel professional told BusinessDay.

It has also been observed that several airline sites even offer reduced costs and extra incentives for customers ordering tickets online.

Rather than now sell tickets alone, the agents try to offer a full package of travel itineraries to corporate organisations or individual customers arranging transportation, holiday package, hotels, motels, sightseeing, transfers of passengers and luggage between terminals and hotels, as well as special events such as music festivals and theatre.

“What they have resorted is to use their professional know-how and experience in the provision of air, train and other transportation schedules, hotel rates and their standards as well as qualities, they now refer to themselves as Travel Management Companies (TMCs).

“They could arrange reservations for special-interest activities such as religious pilgrimages, conventions and business travels, incentive and educational tours”, he added.

Although, many travel agencies had moved against it but but Charles Obioha, executive director at BCD travels in Nigeria, said since it is the practice, especially in Europe, Nigerian airlines have no choice other than to join the train.

He said during a media chat that since they are professional travel companies, the onus is on them to align with global trends.

According to him, “travel agencies must now be professional in order to get their professional fees from their customers; we don’t have to dwell too much on commission, the airlines in Nigeria are trying to tell us that we should align with what is obtainable in Europe and we at BCD as professionals are ready for that. TMC is relatively new in Nigeria, we are preparing for the post commission era because it is never going to be there forever, you have an option to sell or not to sell,” he said.

He even disclosed that in 2012, his company for instance, made sales of ticket and other packages in excess of N9 billion adding that it projects N13 billion for 2015.

There are about 518 travel agents under the membership of National Association of Nigeria Travel Agencies (NANTA).

Amin Agoha, , President of NANTA had in 2012 said that N165.8 billion worth of air tickets were sold by travel agents during that year adding that the figure represented N20.2 billion increase over the NI45.6 billion sold in 2011.

“With this huge volume of business generated by the agencies, it is imperative that our activities are well regulated and controlled to ensure that members are confined within the law,” he said.

The association president said that the sales indicated a high number of foreigners visiting the country. He said that the association was maintaining a comprehensive data of all travel agencies in Nigeria, to ensure that their activities complied with strict rules and regulations.

Analysts are of the opinion that if the agents apply their professionalism well and look away from whether or not there is commission, they could fare better than they used to be.

According to Olu Ohunayo, former president of Cabin crew at Nigeria Airways, ‘they also they need to concentrate on corporate clients and make all efforts to retain individual clients by offering other rudiments of travel such as car rental, hotel, facilitation at airports’.