The decision of El Al Airlines to discontinue commissions to travel agents sent the entire travel sector into an uproar on Tuesday.
“The sector is in a state of turmoil,” Globes quoted an industry source as saying. “The agents have convened ad hoc meetings in order to understand how to deal with the situation.
“The fear is of a chain reaction. United Airlines, which made an exception by keeping its commissions in Israel only because of El Al, will probably do the same thing as El Al now, and maybe also Delta Airlines and Turkish Airlines, which are still paying commissions.”
While the travel agents stand to lose if the measure is implemented as of June 2019, as announced, they contend that El Al will be the real loser.
“We are the ones who push passengers to fly El Al. Without us, they will have a very hard time,” one of the agents warned.
El Al would not be the first to jettison the commission system. It is preceded by Lufthansa, British Airways, Air France, KLM, and others.
The reaction among travel agents was not unanimously negative. Ofakim Travel and Tours CEO Edith Padan, for example, said, “I’m glad about the decision. It’s about time.”
“I believe in competition. We have to charge people handling fees for our work. Since 2007, when Lufthansa switched to zero commissions, we said we’d manage, and when we considered the matter in depth, we realized that we preferred this approach, because we believe that Israeli consumers should pay for the services they get,” Padan said.
“The thinking of consumers in Israel, who tell us, ‘Give me a discount because you’re getting a commission, subtract the commission,’ and so forth, does not facilitate competition and service. You can’t give good service when the entire market structure gets the money from somebody else. This exists in almost no sector. An agent who wants to grow and be outstanding in his field is measured by the consumer and what is being sold to him or her. A commission structure that dictates your profit structure doesn’t make it possible to grow and stand out, because how am I different from others in such a place?”
Meanwhile, the Israel Tourist and Travel Agents Association has not come out for or against the new El Al policy, saying it is “still studying the matter.”