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Etihad Airways recently launched a LAX route to Abu Dhabi, which is great news for travel agents whose West Coast clients would like a premium option to access the Middle East and Indian subcontinent — well, except for the fact that the airline has also made news for ending its payment of the standard travel agent commission rate of 4 percent.
At a recent small media gathering, members of the executive team of Etihad Airways discussed their reasoning for the decision.
“We have existing partnerships with many agents in the U.S. based on their productivity and volume, but we thought to pay 4 percent general commission was not appropriate or needed anymore,” said Geert W. Boven, senior vice president, Americas for Etihad Airways. “But any agency we can make deals with — in the sense of supporting them specifically — we will offer them incentives.”
Etihad representatives added that it was a commercial decision and that the airline believes solid distribution is in place with most agencies and consortium. Etihad will continue to create direct programs with agencies that have the volume to earn.
“It can be an upfront component or a back-end component,” said Michael Kohlstrand, vice president Western USA. “It really depends on the agency’s requirements.”
James Hogan, CEO and president, added that the airline’s decision is not an end to compensation for agents.
“We still do incentives,” Hogan said. “We still do overrides. We do what the market demands. We can’t go in isolation.”