Lufthansa, Swiss International Air Lines cancel agents' commission fees

Companies' representatives in Israel meet with Israeli travel agents reps to ease process of assimilating new model.

swiss air 88 298 (photo credit: Bloomberg)
swiss air 88 298
(photo credit: Bloomberg)
A European trend of cancelling the base commission fees for travel agents has now hit the Israeli market after two European airliners, Lufthansa and Swiss International Air Lines, announced last week that the policy would be introduced here later this year. Annulling travel agents' commission, which stands at about seven percent of a ticket's cost, has become common among European carriers over the past four years - mainly in Germany, Austria, Spain and France. But it has also been introduced by airlines in the US, Canada and South America. Lufthansa, the national German carrier, and Swiss International Air Lines, last Sunday announced their decision to stop paying travel agent fees beginning in September, a date when agents will be free to charge their clientele an independent service fee. The companies' representatives in Israel told The Jerusalem Post that they met prior to their announcement with representatives of Israeli travel agents in an attempt to ease the process of assimilating the new model. The Travel Agents Association wrote in response that it believed customers would ultimately be harmed by the decisions of the two airlines. "The companies have no intention to lower the ticket price in accordance with the cancellation of the agents' commission, but to shift the payment of the commission to the passengers, who will eventually pay more," the association said. It further said that the companies had announced their decision without coordinating with the association. "Business clientele who signed contracts for two years will be forced to pay more, and eventually the carriers will be hurt as a result of this move," said Yossi Fatael, the general-director of the association. An official in the Israeli aviation industry said, however, that other airline companies operating in Israel were planning to announce a similar cancellation of agents' commission fees during 2008, citing the need to stay competitive in a highly aggressive industry. "In recent years, international and regular carriers have had to compete against low-cost carriers by offering a better and improved product," said the official, who asked not to be named. "In this situation, the need to cut back on ticket costs is a condition for those who want to survive. This trend has strengthened the large travel agents in countries which followed this change of policy a while ago." He added: "It shouldn't be forgotten that today's customer is more aware of the variety he can choose from, and prefers to search by himself for the best deal." Both airline companies operate two flights a day to and from Israel. Lufthansa has also announced its intention to reintroduce a third flight between Munich and Tel Aviv, a request awaiting approval by the Civil Aviation Authority. Swiss International Air Lines has reported its plan to launch two daily A340-Airbus flights this spring.