BA To Return To Zero Agency Commission

British Airways finally has declared its intention to eliminate all payments to travel agents in its U.K. home market. It will move to zero percent commission on May 1.

This is the second time BA has gone to zero. However, in the first incarnation in 2001, the airline made flat booking payments to agents instead. It switched to 1 percent commission without booking payments in December 2003.

On that occasion, BA retained a token commission payment to satisfy the International Air Transport Agency agreement, requiring it to remunerate travel agents for each booking they make. This time, BA has taken a strong-armed approach by asking agents to agree in writing that a zero payment satisfies the IATA requirement because agents can charge clients service fees. "If they refuse to agree with us, then we will cancel their appointment as a BA agent," said head of consumer and agency sales Ian Heywood.

Asked if this represented abuse of a dominant position, leaving agents with no real choice, Heywood said: "This is not the approach we would have chosen to go through if others had been available. But the U.K. is the most competitive market in the world. I totally disagree the agent has no choice."

Guild of Business Travel Agents chairman Richard Lovell said: "This is a fundamental change in the agency agreement. We are going to take a few days to work out what this means with our clients."

One clear implication for clients buying published fares from BA is that it amounts to a 1 percent price increase for them.