Saturday, January 13, 2007

MAS defers 0% policy for agents to 2008

In line with the new airfare structure that Malaysia Airlines (MAS) will be implementing on Monday, it will reduce the commission it pays travel agents for ticket sales to 2% from 5% instead of pushing ahead with the 0% commission policy.

The 0% commission policy has been deferred to Jan 1, 2008. This was what the Malaysian Association of Tour and Travel Agents (Matta) told its travel agents in a memorandum dated yesterday, a copy of which was obtained by StarBiz. MAS had originally planned to implement the 0% commission policy on Monday.
The move to implement the 0% policy is not unique. Singapore Airlines implemented that policy several years ago and carriers from the US, Britain, Germany, Switzerland, France and elsewhere do not pay commissions for sale of their tickets to travel agents.
Matta said in the memo that the reduction to 2% was to help travel agents defray cost and help them cope with the new business model. This arose after several consultative meetings between the airline and the association. It is learnt that officials from Matta and MAS had met early this week to decide on the 2% and the deferment of the 0% commission.
The memo stated that the 2% was applicable for all MAS reservation booking fare types but, for full Iata-published fares and government warrants, the 5% commission remained.

MAS in a statement yesterday said it would offer from Monday new competitive fares for customers to enjoy 16 new fare options from eight previously, confirming a report in The Star yesterday.
MAS said it was moving towards a net fare environment in 2008 where MAS, Matta and Bumitra Malaysia (representing wholly bumiputra-owned agencies) would adopt a service fee model.
MAS had been warning agents that a 0% commission policy was inevitable. The move would certainly deprive travel agents of their traditional income of earning commissions on ticket sales, with commissions having fallen from 9% initially to 7% and now 5%.
The commission is partly to pay for agents’ costs but agents that have shifted their focus to offering value-added services such as hotel accommodation, tour and sightseeing packages and even cruises, will not feel the impact as much as those that rely solely on ticket sales. Some agents earn nearly 80% of their income from service fees.
The onus is on smaller agents to venture into value-added services to avoid the crunch in 2008. But in the memo, Matta did recommend its agents to “keep the 2% commission and start charging service fee” effective Monday.
It said the MAS administrative fee remained unchanged for financial year 2007 and MAS ticketing offices would begin charging a ticketing fee to replace the existing service fee for ticket issuance from Monday onwards.
MAS, like other airlines, is pushing for online bookings so that it does not have to pay agents commissions to save costs.
MAS offers some discounts for fares for Internet bookings but some travellers feel MAS can do better with its online offers. To them, the best deals are still offered by travel agents. Who will benefit from the new fare scheme remains to be seen, but travellers are hoping that fares will continue to come down and the fuel surcharges be reviewed given the slide in oil prices.

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