DESPITE ongoing
negotiations with the
travel trade, National
Treasury is pushing full-steam
ahead with its new ‘standard
remuneration model’, cutting
rebates, overrides and
volume-based incentives from
suppliers to TMCs.
Last month, government
departments reported
that it was “business as
usual” (see TNW April 27).
However, only two weeks
later, one government official
says Treasury has now
communicated strict guidelines
to implement the new
regulations and nett rates with
immediate effect. He adds that
there is still a lot of confusion
around the new measures and
that more discussions will take
place with Treasury to gain
more clarity on these.
BA Comair has placed a
code on all tickets issued for
government passengers, which
means the agent cannot claim
an incentive for the sale. Brian
Kitchin, Comair executive
manager of sales, told TNW
government has negotiated a
new deal with Comair that is
non-commissionable. These
private fares are accessed
by inserting a specific deal
number into the booking,
which is linked to the
negotiated nett rate.
“Both BA and SAA have
received strict instruction
from National Treasury that all
government business is noncommissionable.
I imagine any
airline that wants government
business will have to abide
by the instructions of the
Treasury.”
SAA, however, has not
been as quick to implement
the austerity measures.
Spokesperson for SAA, Tlali
Tlali, told TNW that at present
SAA has not changed the
incentive agreements that
the airline has in place for
travel agents booking for
government officials. “SAA will
honour and maintain existing
incentive agreements until
these agreements reach their
termination dates.”
One travel agent, who spoke
on condition of anonymity, says
Treasury invited several TMCs
for personal discussions but
that these discussions didn’t
go well. “Treasury doesn’t
seem to understand the travel
industry. They don’t want
to ensure the sustainability
of the travel industry in the
country. We agree with what
they’re doing; it’s important
to clean up the process and
ensure transparency. But, the
process and the way they are
going about it is amateurish,”
said the agent, adding that
although the Treasury is good
at directives, they fall short
when it comes to taking into
consideration behavioural
change.
“The latest initiative by
Treasury to reduce the cost
of travel by government
departments is more than
alarming,” says Allan Wolman,
director of XL Rosebank Travel.
“Can government dictate
commercial terms to suppliers
of services? Can they dictate
how business is conducted
between service providers and
suppliers?”
Allan believes the
Competition Commission
should address this matter, as
government is imposing anticompetitive
measures on the
industry. “According to reports,
government has engaged
with only four TMCs with the
exclusion of the rest of the
travel trade and this in itself
cannot be constitutional.”
Suppliers should also be
called to account, says Allan.
“Under a free enterprise
system, protected by our
constitution, are airlines
prepared to adhere to what
Treasury dictates? Airlines are
probably supportive of this
measure. Is this the thin edge
of the wedge?”
Meanwhile, agents say it
is time to turn the tables on
government, putting a spotlight
on behavioural issues. One
agent explains that there is
still an exceptional amount of
outstanding payments owed
by government departments to
travel agencies around South
Africa. “It’s about time they
address this as well.”
Loyalty points awarded to
government officials should
also come under scrutiny, says
Allan. “Surely the accumulation
of Voyager miles and other
frequent flyer incentives must
fall under the same regime
as no commission? After
all, the loyalty programme
of an airline is a form of
commission or reward. Will
government employees be
allowed to accumulate their
frequent flyer miles for travel
that is undertaken on official
business?”
