Emirates Airline will axe agent commissions to 0% in the UAE on October 1.

The carrier intends to introduce a 7% service fee at all of its retail outlets and has advised all travel agents to do the same.

"This decision was taken after extensive market screening and surveys involving trade partners, with the ultimate goal of benefitting all parties involved," said Emirates vice president commercial sales (UAE) Majid Al Mualla.
 

"The customer benefits because the new policy makes buying our product more transparent and agents benefit because they continue to earn money by charging transaction or service fees. The new policy also gives agents flexibility to decide on differentiated contracting with their accounts, on a volume and/or regularity basis."

Al Mualla said the time was right to reduce commission to 0% because of the impact of "staggering" fuel price increases on Emirates' operational costs.

"Also, our surveys involving the travel trade indicate that agents are positive about this development and willing to move to a service-fee based environment," he added.

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Al Mualla said a circular would be sent to the travel trade informing them of the new ‘service fees' policy and that starting July 2008, Emirates would conduct seminars and workshops to help travel agents through this transitional period and explain the logistics required to transform their business into a robust revenue-earning model.

"By announcing the new system at this early stage, we are giving our agent partners ample time to prepare for its introduction. We will continue to maintain our close relationship with travel agents, who we consider to be important partners and allies to Emirates' business," he said.

According to ATN's sources, Emirates was poised to introduce its 0% policy in July but the Dubai Travel and Tour Agents Group asked the carrier to delay the date resulting in the October 1 timing.

News of Emirates' commission-cutting tactics has led the industry to believe that other airlines will follow suit in the UAE market.

Most airlines do pay commission except for seven European carriers as well as local airlines Gulf Air and more recently, Qatar Airways.

Etihad Airways executive vice president sales and services Geert Boven said there would be no immediate changes to the airline's commission policy.

"Generally the commission levels worldwide are coming down and as the market becomes more mature, things will change. We can't do it yet but it is a global industry trend. We will see a channel shift worldwide, it is inevitable," he said.

Emirates Airline has already rolled out a zero commission policy in Bahrain, Kuwait, Qatar and Jordan in the Middle East and in Germany, Austria, and Turkey in Europe.

See next month's ATN for a commission update.