Travel agents in Saudi Arabia say their revenues are set to plummet after Saudi Arabian Airlines abolished commission and introduced a new SAR15 (US$3.9) service charge fee for all domestic flight tickets sold.
Prior to ruling, which came in on June 15, agents were entitled to four percent commission on domestic tickets, but now they are forced to implement a maximum SAR 15 service charge, which agents say will lead to a major loss of revenue.
Raju Abraham, office manager, Al Bassam Travel and Tourism said: “Travel agents are not against this decision since the majority of the airlines are at a zero commission for a long time.
“But the limitation of the margin to SAR 15 per ticket is our major concern. As an example, a Saudia first class return ticket to Jeddah cost SAR 2460 and agents used to get four percent on that amount. Now our profit margin for such a ticket will be reduced by 85 percent.”
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“We as the travel agents need Saudia to allow us to claim our regular commission from the clients.”
Majid Kaki, deputy general manager, Elaf Group agreed that travel agents should be allowed to set their own service charge and added that the SAR15 charge “would not even cover expenses”.
“Of course it will lead to a loss of revenue for us. They have put a certain figure on the service charge and we cannot exceed it,” said Kaki.
“I have no clue why they have done this. I am very surprised. It’s a very strange circumstance. Until today I don’t think any other airline has done this but if this works the other airlines might follow.
He added: “I don’t think they should control the agents and how much to charge for the service fee. Each travel agency is different. For example at Elaf Group we have 200 staff but some other travel agencies only have three. We need to be able to provide a good service and I would rather set the service fee myself.
Kaki said Elaf Group has aired its objections about the new service fee with the airline but so far received no response.
“We have asked them not to control the fee. All the other airlines they are all zero commission but none of them have come to us to tell us what to charge – it’s up to us what we can charge the customers.
It will be better to let us travel agents set our own service charges just like the other airlines such as Lufthansa, BA, Austrian have done.”
He added that his staff had now started to divert domestic flight business onto the Saudi low-cost carrier Nas Air and away from Saudia as there was a potential to earn more commission.
A spokesperson for Saudi Arabian Airlines confirmed that: “Tickets issued electronically will be free of charge but tickets for domestic flights issued by travel agencies will have an issuance charge of SR15.”
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