WS To Follow AC Lead With Commission Changes

OpenJaw

WestJet has announced changes to its commission structure on new bookings for domestic and transborder fares, with a start date of 01OCT, 2015. Following on the heels of moves recently announced by Air Canada, the changes will see commission cut to zero on Econo fares, reduced payment on Flex fares and increased compensation on higher-margin Plus fares.


"The change comes as part of an initiative to continue to offer low fares and remain competitive," the airline said in a release.


Commission will no longer apply on Econo fares, in a tit-for-tat move that follows Air Canada's announcement earlier this month that it will eliminate commission on lower-cost Tango fares.


The new WestJet commission level on domestic and transborder fares moves from a standard 7% commission on all fares to a fare-bundle commission of 4% on Flex fares. In a deviation from Air Canada's changes, WestJet has increased commission to 8% on Plus fares – AC is paying 4% on its higher fare categories.


"The change comes as part of an initiative to continue to offer low fares and remain competitive," the airline said in a release.


Another difference between the two airlines' new compensation structure is that while AC's moves were immediate, WS is deferring the changes until 01OCT. The airline says the deferral is designed to give the industry time to adjust.


During that period, WS says its representatives will be meeting with "our partners to further discuss business transformation initiatives in greater detail."


Reached for comment on his competitor's moves, Air Canada V.P. Global Sales Duncan Bureau says there is potential for “tweaks" to its commission structure following the WS announcement.


“We've seen the announcement from WestJet this morning and we will take our time to see what that means," Bureau said in a phone interview from Brazil. “We'll evaluate our announcement and if we need to make some tweaks in our structure to remain competitive then we will do so."

Bureau also pointed out that the posted commission structure represents only a baseline, with many larger producers having different deals.


Reached for comment on his competitor's moves, Air Canada V.P. Global Sales Duncan Bureau says there is potential for “tweaks" to its commission structure following the WS announcement.


“We certainly have very specific deals with a large number of agencies that we don't communicate publicly. By no means does this represent the vast majority of what our individual agreements look like."


Agents will continue to earn commission on WestJet fares sold through GDS systems as they have since 2009. As part of its commission structure changes, AC for the first time is now allowing agents to earn 4% commission for Flex and higher fares on domestic travel bookings made via the GDS
.


WestJet Vacations' base commission of 8% and commissions of 5% on all group fares remain unchanged. As well, all fares on international flights retain the 7% base commission on Econo fares and Flex fares in addition to the increase to 8% on Plus fares.


"After assessing where we want to go with our pricing, we have made the difficult decision to follow a major competitor in its approach to no-frills fares, in this case by changing the commission structure," said Lyell Farquharson, WestJet VP Sales.


"As new competitors come to market, we anticipate they will follow the global trend in the ultra-low-cost carrier category where no-frills fares are offered without commission," he said.








Debbie Gurley-Rivers - May 4, 2015 @ 11:05
Cutting commission will not give you an advantage over the competitor . This is not a shrew move , you are becoming entwined in a tangled web and will find it very difficult to weave yourself out of it .

We have had major large carriers in the past who had marketed their brand in the same fashion, as you so incline to do , to their ultimate demise .
Agents have an influential relationship with their Clients , our Clients. Consumers depend on Agents to educate them on potential changes like this and I can assure you Consumers are becoming very discouraged and Agents are getting dispirit and feeling demoralized .

You have a strong brand , pitch it in a manner that gives you a cut above the rest not to lose face .
Reintroduce the 1pc complementary baggage , offer a light snack , a muffin or cheese and crackers , maintain or increase commission and you will see that you will be far in front of the competitors to the finish end .
That is the advantage you need. Be prudent and envision the big picture .

patti allen - March 18, 2015 @ 10:03
Reached for comment on his competitor's moves, Air Canada V.P. Global Sales Duncan Bureau says there is potential for “tweaks" to its commission structure following the WS announcement.
I think this line says it all! Their only concern is what the "other one" is doing. Is it a game then or based on actual necessity as reported? We are being played!

Harry Schneider - March 18, 2015 @ 10:03
Westjet is just about to lose a major advantage by cutting commissions to travel agencies. That strong support will diminish. Watch their stock price being affected

Marnie - March 17, 2015 @ 19:03
Figures...monkey see monkey do... they forget who go them to where they are... nothing like shooting yourselves in the foot and I agree, I am sure TICO will have to make it more difficult by raising fees to compensate their coffers too...!!! what a bunch a "Yahoo's " all around

peter - March 17, 2015 @ 16:03
So now I can only use consolidators. They will be next on the airlines' target list. I will simply not sell air only flights. After that I will finally decide to close up shop. Maybe TICO will raise there fees to speed that along too.

Luana - March 17, 2015 @ 13:03
Very disappointed that WestJet lowers themselves to AC standards and bites the hands that feed them! Most people won't pay an Agency fee, and Agents' won't work for free, so WestJet will have to hire more staff to deal with passengers which will raise their overhead costs, so not much of an advantage cutting commissions! I can only imagine the long hold-times for guests trying to get through on the phones now!


(will not be published)