Manoj Vagh Manoj Vagh

NZ commission cuts could put many travel agents out of business

Now is the time for agents to reconsider whether they are an agency or a consultancy business.

Air New Zealand announced last week that point-of-sale commission levels are reducing from 5% to 1% for long haul routes and 3% to 0% for short haul routes. This will have an immediate effect on travel agents’ and consultants’ business income. Now you have no choice but to take control of your own business profits.

If an agent sells at gross $4,000,000 NZ long haul the commission reduction will cost $152,000 p.a.

Are you going to remain an agent of suppliers?

Agents get paid by the seller or a fee to sell their products or services (ie real estate, insurance, sports, artists agent). They represent the interests of their supplier and take a commission or charge a fee when they sell the suppliers products or services.

Or are you going to consult to your customers?

Consultants get paid by their customers for their advice and expertise. They get paid when someone engages them to provide a product or service that meets the needs of their customer (ie lawyer, doctor, architect, designer). They provide specialised services that assist their clients to achieve their goals. They generally charge by the hour or by assignment.

You must review your ideas about what you do and how you should be remunerated. Many staff have left the industry and those that remain are highly skilled and not only required to guide clients with their travel plans but also with options should plans be disrupted by Covid.

What value do you put on your own time and skills?

If you are a consultant, you would expect to get paid for your expertise whether your client proceeds with their plans or not.  If they proceed with their plans and you are there to assist them, a consultant expects to be remunerated for this. Charging by the hour would be a place to start. 

All the travel pundits are projecting that Kiwis will want to fly again with confidence in 2022 and who else is there to provide that confidence?

This decision on whether you are a travel agent or travel consultant may be the difference between remaining in business or finally closing the doors.

How will the figures work for you?

Related items