|
Airlines and travel agencies are at odds over the commission on base fares for international flights. Korean Air in mid-December sent notice to partner agencies that it will cut the current 9 percent ticketing fee to 7 percent from April 1. This will reduce agencies' profit by some 22.2 percent. To offset the loss, agencies say, they have no choice but to raise the price of overseas tour packages.
Some 80 percent of international flight tickets in Korea are sold via travel agencies. Korean Air paid out some W200 billion (US$1=W947) in commissions to the travel industry last year. Asiana Airlines paid W100 billion and foreign airlines W150 billion for a total W450 billion last year as the ticketing fee. The agencies worry that, if other airlines follow suit, they stand to lose nearly W100 billion in annual profit. Asiana has also indicated a cut from May 1, and foreign airlines who are paying a 7 percent commission are moving for an additional cut.
Korean Air says the international standard is zero commission. A spokesman said in other countries, airlines pay no commission or at best 3-7 percent for certain areas like the U.S. and Russia.
Lower commissions do not mean cheaper air fares for customers. The dispute between the airlines and travel agencies is over who will get the money. Korean Air's position is that airlines provide the tickets and the agencies collect a service fee from customers to cover their cost. But the agencies beg to differ. They say Korean customers have a different perception of the concept of service cost from Westerners. A travel industry insider says the commission cut will not lower the ticket price but only benefit the airlines.
There are concerns that the cost will be passed on to the customer. The Korea Association of Travel Agents says to offset the loss, it must raise the price of tour products, which will increase costs for customers.
(englishnews@chosun.com )
|
