British Airways today confirmed that on Dec. 1 it will revert to a standard travel agency base commission structure for U.K. agencies just two and a half years after scrapping base commissions in favor of flat booking fees. The carrier will pay domestic U.K. agencies a 1 percent commission per booking.
The new structure, to be officially announced Monday, will replace the Fresh Approach program that was introduced in April 2001 and compensated agencies with "sector payments" ranging from five British pounds per sector to 20 pounds, depending on fare type and trip length
(BTN, March 26, 2001). Those payments in June 2002 were reduced to their current levels, which range upward from 2.50 British pounds per sector. When BA first eliminated base commissions, it said the flat fee structure would be "fairer and clearer" and "more accurately reflect the cost incurred by the agent." It also indicated the fee program would drive distribution cost savings.
"Rapid changes in market conditions over the past year have accelerated the need to reduce our distribution costs further in order to restore profitability and ensure our survival," said Tiffany Hall, British Airways head of U.K. and Ireland sales and marketing, in a statement obtained by
BTN. "To support our strategy to offer full service at low fares, we must compete more effectively with no-frills carriers that pay nothing to travel agents."
In early 2001, before becoming the first major European carrier to completely revamp travel agency compensation, BA paid a standard 7 percent base commission.