Travel anger: Air New Zealand cuts agents' commission on some flights to zero

Front end commissions will drop on short haul bookings and go for long haul. Photo / Supplied

Travel agents are angry at Air New Zealand's move to cut its point of sale commissions on long haul flights from 5 per cent to 1 per cent and ditch short haul commissions completly.

In a letter to the trade the airline says the move is a part of its financial recovery plan.

But agents say this comes as a blow after they worked to help the airline throughout the past 21 months of the pandemic. Qantas has made a similar move across the Tasman.

Air New Zealand cut down the role of agents about 10 years ago but had since worked more closely with the trade.

Travel Agents Association president Brent Thomas said the commission cuts from July next year would trigger anger and hurt among his members, many of who were still struggling as travel recovers only slowly.

Point of sale or front end commission is paid at 5 per cent for long haul routes and 3 per cent on short haul routes - domestic, the Pacific Islands and Australia.

Back end commissions are paid to big travel firms if they hit certain sales targets and these are not affected

Air NZ boss Greg Foran came to the airline from Walmart which takes a notoriously tough line with suppliers.

The airline's group general manager of sales Kathryn Robertson told agents "that the way we have operated in the past is no longer sustainable as we recover from the pandemic impacts and rebuild".

She said the decision was not made lightly.

"However, having a competitive cost base is critical to our long-term success and is an important step in our recovery plan."

Air New Zealand had about 40 per cent of the international market pre-pandemic and as other airlines cut capacity or don't return to this market, the airline could be in a stronger position as travel resumes.

Thomas said there was concern that customers could face higher prices as a result.

He said flights operating at less than 80 per cent capacity could be loss making and it was agents who often got airlines over the line with bookings they brought.

Customers were now asking which airlines and other suppliers were reasonable about refunds as travel will remain complex for the foreseeable future, he said.

The adjustment to point of sale commissions will come into effect from 1 July 2022.

Leanne Geraghty, Air New Zealand's chief customer and sales officer, told the Herald their decision was not made lightly.

"Remaining competitive is critical to our long-term success and is an important step in our recovery plan," she said.

"We're committed to being strong supporters of the New Zealand travel industry and its recovery. Agents add tremendous value for many customers given their expertise and specialist knowledge of destinations far and wide. We'll continue to provide front line support for travel agents through our agency sales team and account managers, commercial agreements and funding for joint marketing and promotion activity.

"We look forward to continuing our strong travel agency partnerships as the new travel environment emerges, and we adjust to the changes together."