Did you know that airlines do not pay commission? And why not?

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Airlines don't pay commission?
Did you know that airlines in Brazil no longer pay commissions to travel agencies? And why did the airlines make this decision?

This article explores this significant shift, starting with Delta Airlines’ pioneering decision in 1995 and moving on to TAM’s adoption of the distribution fee (DU) model in Brazil in 2008. Discover how DU, RAV and TEB work and how they differ from commissions, as well as understanding the impact of this geographic area of albania change on the travel market, both for agencies and consumers. The article also addresses the strategies adopted by travel agencies to adapt to this new scenario and the importance of consolidators in this process. If you own a travel agency, this article is essential reading to understand the transformations in your market.

History
On February 9, 1995, Delta Airlines cut the commissions it paid to U.S. travel agents to 5% of the fare up to a maximum of $50 one-way and $100 round-trip.

In Brazil, the first move in this direction was made by American Airlines, which cut the commissions paid to Brazilian travel agencies from 9% to 6%.

The major move that completely changed the Brazilian travel agency market was made by TAM (now Latam) on January 11, 2008. Commissions were eliminated and the DU (code for Distribution Fee) was implemented. The creation of this fee was the result of negotiations between national airlines and ABAV.

The calculation of the DU is similar to that of a commission, as it is a percentage that is applied to the value of the ticket fare with a minimum of R$40.00. It differs from the commission in that it is a fee charged to the customer by travel agencies, and not by airlines, although they, the airlines, process the collection and pass the amount on to the agencies.

It is important to note that DU only exists in Brazil and that only national airlines have adhered to it.

In 2008, commissions would be eliminated; this was inevitable. Airlines were already operating this way in other countries, and Brazil was resisting the change. Most travel agencies were not prepared to operate without commissions. The DU was a solution that was seen as temporary, to help agencies transition their business models.

How travel agencies ' remuneration changed in Brazil
As mentioned previously, only domestic airlines use the DU. Foreign airlines have eliminated it and do not offer compensation that is not based on productivity. The so-called incentives, which were previously called over commissions. Most agencies do not have sufficient productivity to receive the incentive. That is where the consolidator comes in. By consolidating (adding up) the activity of several agencies, the consolidator reaches the productivity indexes, receives the incentive and passes a portion of it on to the travel agencies.

In the case of airlines that did not adhere to the DU, the consolidators created a new fee field on their booking portals. This is how the RAV (Travel Agency Fee) and the TEB (Ticket Issuance Fee) came into being. The RC (Consolidator Fee) also came into being. These are all fees, not commissions. They are usually calculated as percentages applied to the ticket fares. However, these are suggested amounts. Each travel agency, as an independent company, must know how to price its services and charge the amount it deems appropriate. This means that the agency can change the RAV and TEB amounts. The DU amount, when it exists, cannot be changed, but it can be reset upon request to the consolidator. In this case, the agency starts using the RAV or TEB or another name it prefers.

Therefore, your agency can charge more than the amount that appears in the quotes on the consolidator portals. Or less, if you think it is a necessary or important action for your agency.

This is widely used by OTAs (online travel agencies). Because they have a high sales volume, they receive incentives from airlines. Theoretically, they also have low operating costs, since much of it is online, without direct human interference. And so they charge lower fees to customers.

On the other hand, when we see fares of R$1.00 and fees of R$2,000.00, it is not the airline trying to pay the agency less. It is not paying at all. It is just a marketing action to say that the fare is low. This action is quite risky, as it may even be considered false advertising.