RIYADH, 13 October — Airline companies operating in the Kingdom have decided to reduce the commission given to travel agents from nine to seven percent of the ticket value from Nov. 1.
Airlines have also decided to reduce the number of authorized agents whose activity will be limited to sales of a single airline’s tickets and will receive commissions up to 12 percent in accordance with their sales.
Abdullah Salman Al-Johani, Saudia’s assistant vice president for advertising and marketing, told Arab News that the plan to cut commission rate was in line with the measures taken by international airline companies.
The International Air Transport Association in August last year canceled a decision specifying ticket sales commission, leaving the matter to market conditions.
Mohaideb Al-Mohaideb, director-general of Assarh Travel and Tourism Company, said the decision to reduce the commission will negatively affect travel offices, especially in the aftermath of the current international events which have already shrunken air travel by 40 percent.
"The new move will certainly reduce the revenues of these travel offices and make them suffer losses," said Mohaideb, who is also chairman of the National Air Transport Committee at the Council of Saudi Chambers of Commerce and Industry.
Nasir Al-Tayyar, director-general of Al-Tayyar travel agency, agreed with Mohaideb and urged the authorities to review the decision.
"Saudis generally reject the imposition of new fees as well as the increase in prices. This should be taken into consideration when decisions are taken," he said.
Al-Tayyar also pointed out that 60 percent of Saudia’s tickets are sold through travel agents.
International airline companies have been trying since several years to reduce expenditures in line with global economic developments.
Rashad Rifae, chairman of the foreign airlines committee at King Abdul Aziz International Airport in Jeddah, said the foreign airlines usually follow national airlines in prices and commissions.
"Foreign companies will also reduce commission to travel agents effective from early next month," he pointed out.
Al-Johani said Saudia tried to delay implementation of the decision on reducing commission in its bid to protect travel agents and offices.
"But Saudia faced pressure from international companies which have started applying new prices at local markets," he added.
Airline companies in some markets, he said, have reduced commission to six to five percent while some others cut it to zero.
"Travel agents in such markets are just satisfied with service charges," he added.
Mohaideb said most travel agents give part of the commission they receive to clients due to tough competition and to win more customers.
"Some of them keep only three percent for them. But the new measures will further reduce their share," he added.
