Aer Lingus cuts travel agent commission rate from 9% to 7%

Aer Lingus is cutting the commission rate it pays travel agents from 9 to 7 per cent from March 1st next. A letter has been sent to travel agents informing them of the decision, explaining it is part of the airline's strategy to get greater efficiency from its distribution system.

An Aer Lingus spokesman said the company had been involved in lengthy discussions with the Irish Travel Agents' Association and the Guild of Business Travel Agents. "Clearly it doesn't come as welcome news to them but it's not unexpected either. This is very much in line with industry norms. Commissions have been in the process of being reduced in Europe and the US for quite some time. It's not good news but they knew it was coming," he said.

He added that the airline had been trying to achieve efficiencies right across the board and would be looking at all the ways in which it distributed its products. This would include online booking, due to be introduced shortly. "We're all going to have to cut our cloth in terms of costs," he said.

Asked if Aer Lingus feared travel agents would react by refusing to sell Aer Lingus tickets as many did when Ryanair reduced its commission from 7.5 to 5 per cent four years ago, he replied: "We have a very good relationship with the trade, always had. It's not something we introduced without any notice. I would hope they would feel it was an industry trend and that this was the way the industry was going. We all need to become more efficient. We would be hopeful it would be seen in that light."

Industry sources say that other airlines flying out of Ireland had been waiting to see what Aer Lingus would do before themselves taking a decision to reduce commission. More than 40 airlines now service the Irish market, but the biggest carriers are British Airways and other European and American airlines. British Airways has already announced its intention to reduce to zero commission from April 1st next and instead pay a flat fee to an agent for making a booking. The Irish Travel Agents' Association was unable to provide a spokesperson to comment on the decision. However, it is understood it had not expected Aer Lingus to make an announcement until after the ITAA had reconvened its annual general meeting to discuss their position.

Mr Michael O'Leary, chief executive of Ryanair, said Aer Lingus was " five years behind the rest of the industry. Everybody has cut commissions at this stage. The question is, are they going to reduce fares? Lower fares are not in their vocabulary. We look forward to the travel agents beginning to boycott Aer Lingus now. For the last four years they have been paying 9 per cent to people who won't sell Ryanair anyway. You would wonder why Aer Lingus don't go straight to 5 per cent," he said.