Swiss and Lufthansa to cancel agent fees in Israel

Swiss International Air Lines and Lufthansa are becoming the first full-service airlines to stop paying travel agents in Israel commission when they book tickets for clients on flights operated by these national carriers, according to a report in the Israeli newspaper, Haaretz. The majority of full-service airlines still pass on to the agent about 7% of the price of a ticket whenever he/she arranges a booking for a traveler. This is how most physical travel agencies have turned a profit for the past several decades. Haaretz predicts that the new “no commission” approach announced by Lufthansa and Swiss International may “revolutionize” the travel industry. As could be expected, travel agents in Israel have strongly opposed the move, but appear to be fighting a losing battle, as a number of other major carriers seem prepared to follow this same approach. British Airways, Air France-KLM and Israel’s El Al are also planning on canceling agent fees in 2008. Both Swiss and Lufthansa will end commissions in six months, or just ahead of the 2008 summer travel season.

Travel agents in Israel will likely have to come up with other ways to raise funds. One possibility mentioned in Haaretz is to charge all customers a $50 handling fee when arranging a booking. Additionally, major airlines have indicated that they would still pay travel agents special bonuses if they meet or exceed sales expectations. Some in the travel industry, however, warn that the new approach will increase the price of airplane tickets. Nevertheless, those who do not wish to pay the extra handling could book their tickets directly online.

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