Lower cut from ticket sales enrages agencies
February 29, 2008
Korean airline companies have sparked a war with travel agencies by proclaiming that they will be lowering their ticketing commissions.Korean Air announced last December that it would lower the commission it gives to various travel agencies, from the present 9 percent to 7 percent, by April. It said new ways of buying tickets, such as by phone or Internet, have lightened the labor and cost load of travel agencies. Asiana Airlines followed suit last month, saying it would also lower its commission to 7 percent by May.The Korea Association of Travel Agents battled back in a press conference yesterday. The organization’s head, Chung Woo-sik, said, “If these commissions are lowered, around half of Korean travel agencies will close within five years.”The association, which represents Korea’s travel agencies, also said that an estimated 100 billion won ($105.6 million) in losses is expected for the travel industry as a whole if this reduction is realized, along with around 22,000 layoffs.“It is tyrannical behavior that these giants, with trillions in sales, are shaking this industry by unilaterally lowering commissions to make more profit,” said Chung.“Around 60 to 70 percent of all profits made by local travel agencies come from these ticketing commissions,” said Joe Gi-seock, the public relations director of KATA. “This abrupt announcement by these airlines is very lopsided. We haven’t had time to come up with any alternative.”The airlines however, are firm in their position. “In the U.S. and in major countries in Europe including France and Germany, there are no such commissions given to travel agencies. As the paradigm for the industry is changing, these agencies need to step up to the plate and come up with quality packages and tours instead of relying solely on commission fees,” said a representative for Korean Air.“These agencies can’t just rely on airlines without coming up with fresh products and keeping up with global trends,” said Lee Cha-youn, a spokesperson for Asiana Airlines. However, Joe says that this is not the issue. “It’s not a matter of coming up with new tour packages and products. If travel agencies don’t get the money from commissions, we’ll have to charge more for package tours and the customers end up losing out.”KATA was planning a protest in front of the Korean Air building in Seoul but members changed their minds after finding out that the airline has legal protection against protests in front of its building.“Travel agencies and airlines have a symbiotic relationship, in the end, and we hope that they wake up and become more competent in this tough global industry,” said Lee.By Cho Jae-eun Staff Reporter [jainnie@joongang.co.kr]
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