BA has decided (clearly this must have taken a few months to come to the conclusion) that the premium and business traffic is down and going to stay down for a long time. With their planes configured for a larger premium traffic share - they are probably wringing their hands over the loss of this valuable and higher yield business.
But what to do about it? Earlier this year the airline opened up the tier system to discount tickets. Now the shoe is about to drop on the Biz Travel Agents
In a conversation with the UK's TTG-Business Trade Magazine, Scott Davies, BA’s head of TMC relations, told ttgbusiness.com he had finished a period of careful consideration regarding SMAs and would be informing agencies about how the agreements will work in the future.
Davies said: “BA’s sales and marketing agreements for TMCs have followed a similar structure for the best part of ten years. The market has changed dramatically in recent times and we recognised the need to re-evaluate our approach.
“We consulted with key trade partners during the summer regarding the most mutually beneficial approach to take and we have opted for two key changes.”
He said BA would firstly update the activities TMCs need to complete to trigger payment, which will make the agreements more relevant to today’s market. ttgbusiness.com understand this means TMCs will have to work harder for their SMA.
The airline had “re-visited” its fixed and variable payments within the agreements, said Davies. “This is key as variable payments provide TMCs with a more interesting upside as the market begins to recover.”
He said updates to SMEs would take effect in the New Year.
My team has been on the phone to a few TMCs in the UK and so far no response as the issue is very sensitive. Given BA's footprint in the UK no one is making any statements. However smaller TMCs are saying that so far they have not been contacted - that will likely mean they will lose out. However that is speculation on my part. I believe it will be the bigger players with footprints that straddle the Atlantic who will get the best dea;s but the guaranteed payments are likely to go in favor of a pure variable incentive model albeit at a lower number than before with some high thresholds. Small and Mid size players will find this hard to achieve.
Other airlines are likely to step into the breach and provide some level of value to the players. With the Transatlantic market now very competitive, BA needs to tread very carefully.
Could it be that old cosy (and some might say unhealthy) relationship between GBTA and BA moves to a new and more financially conservative basis? Inquiring minds want to know.
Cheers
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