El Al Airlines will cut travel agents’ commissions from 7% to 5% in May.
Israel Tourist & Travel Agents Association chairman Kobi Karni said that the association is considering legal action against the cut. “Travel agents received with surprise and disappointment El Al’s notice that it will reduce their commissions under the agreement with the airline,” he said.
Karni added that, given El Al’s dominance in the Israeli market, the reduction could result in a restructuring in the market harming travel agencies’ soundness. “We’re examining the legal consequences of the move, because the court only recently ruled that under the agreement between the airlines and travel agencies, the airlines must pay travel agents for their work. We’ve strongly expressed our position on this matter in the past, and we will use all the legal tools at our disposal to prevent roll the airlines’ obligations to travel agents on to passengers.”
Eshet Tours CEO Ephraim Kramer said, “El Al’s conduct is disproportionate and the step will affect travel agents at the height of the season. We ought to expect from a company like El Al to give 6-12 months notice about such a decision.” He added, “El Al is trying to grasp the stick at both ends. On one hand it dictates travel agents’ earnings, and sets the agents’ profit very low. It would be better if every agent set his own fee according to market conditions, with the diktat of a maximum commission that El Al is trying to impose.”
Kramer said that El Al’s decision could force small travel agencies with large staffs to close, and that the reduction in commissions by 2% could reduce agencies’ fees by up to 28%.
Source: GLOBES ISRAEL