Saudi agents fear revenue dive as commission ends

Saudia to abolish commission on June 15

Saudi Arabian Airlines is abolishing commission
Saudi Arabian Airlines is abolishing commission

Travel agents in Saudi Arabia are gearing up for an expected revenue dive starting June 15 as Saudi Arabian Airlines announced it is abolishing commission paid to travel agents.

Agents have been eligible for 4 percent commission on Saudia domestic tickets. When the airline switches to zero commission in two days time, a fee of SAR15 (US$3.9) will be added to local tickets issued by travel agencies and Saudia offices.

But travel agents say the SAR 15 service charge is not flexible enough and will lead to a major drop in 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 level for a long time and agents are at free will to collect the service charges.

“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 4 percent on the same. From 15 Jun 2010 onwards our profit margin for such a ticket will be reduced by 85 percent.”

“We as the travel agents needs Saudia to allow us to claim our regular commission from the clients.”

A spokesperson for the airline said: “Tickets issued electronically will be free of charge but tickets for domestic flights issued by travel agencies or Saudia offices will have an issuance charge of SR15.”

Saudi has introduced direct sales through its website. But agents do not expect to see a rush to online booking.  "We do not expect any drop in the sales," said Abraham. "Still majority of passengers prefer to deal with their agents for their travel needs."

 

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