Dogfight looms on Air NZ booking fees

By DANIEL RIORDAN

With no resolution to their dispute in sight, travel agents upset with Air NZ's decision to slash commissions and encourage online bookings are preparing a campaign aimed at winning public support for their cause.

Travel Agents Association president James Langton said his members aimed to launch the initiative at the end of next month when Air NZ unveils its new airfare structure for its no-frills domestic services, starting in October, and the incentives package it will offer agents in lieu of commissions.

The airline is removing its 4 per cent commission for each domestic ticket, and travel agents fear it will also look at cutting international commissions.

Some agents are already encouraging customers to book with Air NZ's competitors.

The country's biggest agency, Flight Centre, has threatened to take elsewhere the $205 million of annual business it does for Air NZ.

Air NZ spokesman Mark Champion said the airline was continuing to discuss its plans with agents, but indicated there was little room for negotiation.

The airline maintains that in the tougher aviation environment following the September 11 terrorist attacks it needs to reduce the cost of selling its tickets so that it can lower its fares.

That means selling tickets online.

However, many agents have said the incentives would be poor substitutes for commissions, and warn that they will promote other airlines at Air NZ's expense.

Agents say the only thing stopping Air NZ from promoting its lowest-cost fares solely on the internet are conditions attached to its sale of computer reservation systems in March last year.

The airline pocketed close to $80 million when its part-owned subsidiary, Travel Industries Automated Systems (TIAS), sold its computer reservation companies, Sabre Pacific and Galileo South Pacific, to their original US-based parents, Sabre Inc and Galileo International.

The companies - known as global distribution systems or GDS - were sold as the airline offloaded non-core investments.

Travel agents pay Sabre and Galileo for the use of their systems (Amadeus is the third big GDS in New Zealand) and the reservation companies charge the airlines for each flight segment booked through them.

That cost is believed to be between US$3 ($6.10) and US$4.80 ($9.80) per segment per person.

Langton said Air NZ had held back because the terms of the TIAS sale required the airline to support the travel industry until August next year.

Champion said the sale agreements between the parties were confidential and he would not comment on any conditions that might be attached.

"But we wouldn't be as confident as we are going down this track if we didn't feel comfortable with [the sale contracts]."

Galileo's Australasian general manager, Mark Rizzuto, said Air NZ had not contravened anything in his company's sales contract.

"Whether we like it or not, Air NZ is undertaking a commercial position in the marketplace," he said.

"It is promoting its own services and its own systems and there'd be no way anyone would have been able to limit that sort of contractual position."

Sabre Pacific vice-president marketing Hans Belle said he was not familiar with the sale agreement's terms and conditions.

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