BA to ditch Fresh Approach

Thursday, 29 Aug, 2003 0

British Airways is to ditch its Fresh Approach payment scheme and pay agents in the UK a flat 1% commission per booking instead, it has confirmed.

The move will infuriate agents already disillusioned with BA and could lead to a further wave of switch-selling from the airline. BA argued when it introduced the Fresh Approach sector payment scheme that it was a fairer system because it rewarded agents according to the work they did, rather than on the value of the ticket they sold.

And the announcement will vindicate those UK agents who argued that Fresh Approach, which was introduced in April 2001, was always going to be a halfway house measure that would eventually lead to agent payments disappearing altogether.

Tiffany Hall, British Airways head of UK & Ireland sales and marketing, said: “Rapid changes in market conditions over the past year have accelerated the need to reduce our distribution costs further in order to restore profitability and ensure our survival.

“The business environment is even more challenging now than when our Future Size and Shape review took place in February 2002 and our business plan to 2005 is focussed on cost reduction and business simplification. Distribution costs are a significant part of our cost base and therefore a key part of this plan.

“To support our strategy to offer full service at low fares, we must compete more effectively with no frills carriers who pay nothing to travel agents. We have lowered our fares during the last 18 months and to sustain these lower prices, we must reduce our distribution costs further.”

The new scheme will come into effect on December 1. And according to ABTA aviation board director Sandy MacPherson there is nothing agents can do but accept the changes, as there is no scope for legal action against BA. He explained this was because ABTA lost its earlier commission case against BA at the Office of Fair Trading.

He told TravelMole: “We only got wind of this a few days ago and unlike the changes they made with Fresh Approach this has been brought in as a fait accompli. There is no scope for negotiation or dialogue, it is being imposed from on high and as well as being angry we feel genuinely hurt.”

While the airline believes that reducing distribution costs is the only way it can compete effectively against the no-frills carriers, agents will be concerned that other UK airlines will follow BA’s lead making further reductions in commission inevitable.

Mr MacPherson added: “Why does BA only and always look at agents as a cost when they could be a big source of income? Yet again they are alienating agents.”

See next week’s TravelMole for an in-depth interview with Sandy MacPherson on the BA changes.

See our previous stories:
12 Dec 2002ABTA loses case against BA
13 Feb 2002BA cuts Fresh Approach payments
23 Jan 2002BA and ABTA at loggerheads over Fresh Approach
08 Jan 2002ABTA tries to calm Fresh Approach fears