airline

ASATA ‘disappointed’ at AF KLM comm revision

Air France KLM has revised its trade commission structure effective December 1.

ASATA has noted with disappointment the decision and announcement by Air France KLM to revise its trade commission structure effective December 1, but must reiterate that it is not ASATA’s mandate to get involved in commercial agreements between travel agents and airlines.

ASATA’s mandate is influenced by the Competition Act that states that an association is, by nature, a group of competitors joined together for a common business purpose, an association satisfies what would ordinarily be a difficult element in proving an anticompetitive violation.

As such, any association activity that arguably could be perceived as being anticompetitive exposes ASATA and its members to the risks and consequences of the Competition Act and its watchdog, the Competition Commission.

Historically, the most significant area of antitrust concern for associations has been price fixing. Price fixing is a very broad term that includes any concerted effort or action that has an effect on prices, terms or conditions of trade, or on competitors. Accordingly, ASATA and its members should refrain from any discussion that may provide the basis for an inference that they agreed to take any action relating to prices, services, production, allocation of markets or any other matter having a market effect.

The decision by AF/KL also falls within the following Resolutions and cannot be challenged:

IATA Resolution 824 stipulates:

9. REMUNERATION

for the sale of air transportation and ancillary services by the Agent under this Agreement the Carrier shall remunerate the Agent in a manner and amount as may be stated from time to time and communicated to the Agent by the Carrier. Such remuneration shall constitute full compensation for the services rendered to the Carrier.

Further:

RESOLUTION 824a

APPLICATION OF THE TERM ‘COMMISSION’

PAC1(29)824a(except USA) Expiry: Indefinite PAC2(29)824a Type: B PAC3(29)824a

RESOLVED that, for the purpose of the Passenger Agency Conference Resolutions, where applicable, the term “commission” shall be deemed to include any form of remuneration.

Despite this, it is with anger and disappointment that our members took note of the recent announcement.

In a market where travel agents deliver around 80% of all airline sales, it is astounding that airlines still do not appreciate and reward this effective distribution channel. In no other industry are the biggest sales channels shown this level of disdain for their efforts.

To add insult to injury, this announcement comes off the back of a massive strike action in which the same travel agents stepped in to assist thousands of affected Air France passengers, at no cost to the airline.

The courtesy of engaging with the travel agent representative body prior to choosing to implement a change of policy of this nature would have also been highly appreciated.

We congratulate those airline that continue to show support to the travel agency sector; respect and value the role that travel agents play and reward them in a manner that is appropriate to the efforts.

Finally, ASATA will be looking specifically at the impact of actions like these on its members and assess future scenarios so that members are equipped to review their current business models and prepare for changes in the industry.