Jakarta - The Indonesian Air Carriers Association’s (INACA) announcement to cut agency commissions for domestic air tickets from seven per cent to four per cent is expected to push more corporate travel agencies from a commission-based to fee-based system.

INACA said last month the cut was part of efforts to overcome rising operational costs caused by fuel increases.

Business Travel International Vaya Tour sales and business development manager, Mr Andhie Saad, said: “We have applied the fee-based system for some time and more and more of our clients have come to accept it so we do not expect the commission cut to affect us.”

Carlson Wagonlit Travel Indonesia general manager, Ms Rita Rompas, said: “Many MNCs are using Garuda Indonesia which has launched corporate travel programmes with discounts of more than 10 per cent. This is even higher than the seven per cent commission the airline pays agents and many clients are already making direct bookings. But we don’t expect any impact as we charge clients a flat fee for all transactions.”

So far only Garuda has this loyalty programme for corporate clients. Some even welcome the cuts. Mr Saad said although he did not believe the move would solve the airlines’ problems, it would help TMCs move away from an over-dependence on commissions.

“A Jakarta-Surabaya ticket of 700,000 rupiah (US$73) saves an airline 21,000 rupiah only (from the three per cent cut). But for agents who depend heavily on commissions, it means a lot.

“Therefore, the cut will prompt agents to find other ways to close the gap. One way is to be more proactive and justify charging a service fee by highlighting to clients how they can help them to reduce T&E costs. “However this will require agents to invest in skilled manpower.”

But an Association of the Indonesian Tours and Travel Agencies board member, who declined to be named, said: “Realistically, the big TMCs in big cities such as Jakarta and Surabaya can apply such fees, but I don’t think the ones in the regions, whose livelihood depends on ticket sales, can do so as their clients are not big companies.

“Even if they want to go fee-based, their clients may not be ready.”