New dawn for SAA trade deals

SAA HAS been given the nod from
the Competition Commission,
allowing the airline to review its
override agreements with the travel
trade.
TNW first reported on SAA’s intentions
to restructure its override commission
agreements with retail travel agencies
earlier this year (TNW March 24).
Although agents were unclear about
exactly what changes would be made,
it was believed that the airline would
move from a volume-based to growth
incentive model.
SAA’s acting ceo, Nico Bezuidenhout,
announced at Indaba earlier this month
that the airline would develop “a new
distribution strategy”, which will see
SAA “closely embrace and leverage
travel agency and TMC partners”.
The initiative would focus on revenue
gain, which would include addressing
several commercial areas. “To optimally
cast SAA’s revenue-net and claw back
past inefficiencies, a cohesive approach
is required, which will see SAA’s internal
efforts supported by aligned marketing
and communication activities.”
Sylvain Bosc, SAA’s chief commercial
officer, told TNW: “Previously, SAA
was seen as a dominant player in
the market so the competition
authorities tried to make sure that the
incentive contracts that SAA put in
place would not bar potential airline
competitors from being able to compete
with SAA. This was tying the hands of
SAA with regards to its relationships
with the trade.”
According to Sylvain, SAA has
now extensively engaged with the
competition authorities to explain the
new market reality, in which SAA is no
longer as dominant. “There has been
a tremendous influx of capacity in the
domestic, regional and intercontinental
markets. So, today, it’s a very different
game that SAA plays. We need to revise
the way we can engage with the trade
in order to boost our efficiency against
new dominant carriers in the market,”
he said.
The new strategy re-introduces the
notion of “pay-for-performance” in trade
incentive contracts, he says. “We’ve
now been given the tools to compete
more efficiently against other airlines
that are extremely active in the SA
market.”
Sylvain adds that negotiations with
the trade have, so far, been very
positive. “It’s always very constructive
to speak to our partners. Every one of
them has different views on how we
can improve the contracting exercise
that we are rolling out. The trade in
SA is very supportive of SAA because
they know it’s extremely important for
the SA market, to have a strong and
commercially viable SAA.”
“SAA is definitely on the right
track with its new strategy. They
have restructured their agreements
to reward TMCs and travel agents
based on growth and on support and
are rewarding those that have been
supporting the airline consistently.
That is definitely the way to go,” says
Dinesh Naidoo, Serendipity Tours group
operations director.