Qantas to dramatically cut agent commissions
James ChappleQantas will slash commissions paid to travel agents on international ticket sales as part of wide-ranging new cost-cutting measures to mitigate huge Covid losses.
The Australian carrier will reduce front-end agent commissions from 5% to just 1%, effective from July 2022 "giving time for the industry to adapt". It is forecasting an annual pre-tax loss of AUS $2 billion (£1.1 billion).
"Travel agents remain an important partner, and Qantas will work with them on broader revenue opportunities, particularly through technology," said the carrier on Thursday (20 May).
The Australian Federation of Travel Agents (Afta) said it was disappointed by the move, stressing it made "strong representations" to Qantas on the need to maintain the status quo given agents selling Qantas primarily made money on its international services.
Other cost-saving plans include a two-year wage freeze and offering voluntary redundancy to international cabin crew, with little prospect of a resumption of international travel to and from Australia until next year.
Alan Joyce, Qantas Group chief executive, said: “The fact we’re making inroads to the debt we needed to get through this crisis shows the business is now on a more sustainable footing. The main driver is the rebound of domestic travel, which now looks like it will be bigger than it was pre-Covid, at least until international borders re-open."
Earlier this month, Qantas pushed back its plans to restart international flights to the end of the year, with little expectation of any "significant" reopening of Australia’s borders until mid-2022. It is, however, hoping to capitalise on "pockets of tourism" through travel bubbles with countries with high rates of Covid vaccination.
In a statement, the Afta board said: "It’s true there has been a gradual global transition to reduce [Iata] BSP payments, but that transition happened in a pre-Covid world. The reality of Covid and the ongoing paralysis of international travel until at least mid-2022 puts Australia’s travel agents and businesses in a very difficult position.
"While we are grateful Qantas has provided one year’s notice of these changes following strong representations from Afta, the reality is the ongoing paralysis of international travel to and from Australia has hit travel agents and businesses extremely hard and this is another unwelcome blow.
"The Afta board notes the long-standing relationship Qantas has had with travel agents and businesses and we ask Qantas to work closely with us to optimise benefits for agents as we move forward."
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