Re: zero base commissions globally

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Well there is going to be a court case in Canada to test that very theory.

Mark

Addison Schonland wrote:

> Further to today's exchange re. the perfect storm for airlines....
>
> >
> > From Travel Management DailyŠ, June 3, 2002
> > ++++++++++
> > IATA IS ANGLING to implement a new sales agency agreement that could
> > prompt some foreign airlines to adopt zero base pay globally as well as
> > effectively curtail offshore ticketing arrangements designed to circumvent
> > commission cuts in the U.S. The issue will come to a head in Miami in late
> > June when the IATA Passenger Agency Committee meets to consider language
> > for a proposed agreement that for the first time says agencies are
> > entitled to "fair remuneration" for selling air tickets. IATA is expected
> > to fight the wording or anything like it, contending such language could
> > be interpreted as obligating carriers to pay commissions.
> -----------------
> Seems like the airline industry kind of gets it.  I don't think IATA can get
> this done as quickly as they say - imagine the airlines all agreeing in so
> short a time? It will be interesting to see how IATA pulls this off.
>
> It is fascinating to watch supplier desperation to maintain control on a
> business model that no longer works very well.  Seats are commodities,
> nothing more.  The pricing models are not as powerful because the paradigm
> has shifted power to the consumer....it is a demand driven model now.
> Imagine being in a business with fantastic capital costs, horrific labor
> problems (~40% of all costs) and no real pricing control.  (IMHO)
>
> Some concerns - Is this not some kind of global collusion?  Which law
> applies here?  Can IATA actually do this? What happens if one small place
> decides to keep commissions in place - hypothetically Tonga - all agencies
> then run their sales through there to keep their revenues.  The tax
> implications are fantastic - who pays tax then?  And whose taxes apply?
>
> Ah, the beauty of the Internet!

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