• Tuesday, May 28, 2024
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BusinessDay

Airlines’ zero commission policy, others force travel agencies’ merger

Nnamdi azikiwe airport 22

Nnamdi azikiwe airport 22The last may not have been heard of the shortfall of the zero commission policy formulated by major airlines to cushion the effect of high operational finances as travel agencies in Nigeria begin to merge.

Four major players in the business namely Dees Travels, Fishglow Travels, Quantum and Touchdown have merged to set the ball rolling.

Confirming the development, Yinka Ladipo of Dart Logistics, who is also the vice president, Lagos zone of the National Association of Nigerian Travel Agencies (NANTA), said it is true that the travel agencies in Nigeria are embracing merger to form stronger operations.

He told MediaAge, a newswire, that “it is actually true. Consolidation is a necessity with the way the airlines are coming with all kinds of policies. For example, it is very difficult for agencies to survive under the zero percent commission era. But before now it was the commission we receive from the airlines that we use in taking care of our overheads and all our expenses. The consolidation is necessary. Without the consolidation, it will be very difficult to survive in the business. For the numbers of agencies we have, if an agency stands alone it tends to lose a lot”, he said.

“Just as you have mentioned, it is no longer secret that these travel agencies have come together to form one. With the trend we are witnessing of the consolidation, at the end of the day we might likely have just 15 travel agencies in Nigeria in years to come ”, he said.

He said four of the agencies have already merged.

BusinessDay learnt that before the merger option, wise travel agents had shifted attention to what has been devised as Travel Management Companies (TMCs) to remain in business.

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”, Fola Adebayo, a travel consultant told BusinessDay.

As a TMC, 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.
Ladipo added that “at the end of the day, it is a win-win situation for all the stakeholders including the agencies, airlines and the passengers because the passengers will pay less ”.