Korean agents face commission cuts
Korean Air will cut the current nine percent ticketing fee to seven percent from 1 April – a move that hasn’t gone down well with agents in Korea, a report said. Some 80% of international flight tickets in Korea are sold via travel agencies. Korean Air paid out some W200 billion (US$210 million) in commissions to the travel industry last year. Asiana Airlines paid W100 billion and foreign airlines W150 billion for a total W450 billion last year as ticketing fees. Asiana has also indicated a cut from 1 May , and foreign airlines who are paying a seven percent commission are moving for an additional cut.
According to the report, the agencies are worried that, if other airlines followed suit, they would lose nearly W100 billion in annual profit. Korean Air says the international standard is zero commission. A spokesman said in other countries, airlines pay no commission or at best 3-7 percent for certain areas. It said agencies need to levy a service fee on customers to cover their cost.
The Korea Association of Travel Agents has said that to offset the loss, it must raise the price of tour products, which will increase costs for customers.
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