Tracas Calls on Cruise Lines to Protect Pay

Las Vegas - While the cruise lines are doing a great job sparking sales with their promotions, the industry should protect agency commissions on promotional fares at their original levels in order to ensure a "vibrant, healthy" agent community going forward, Vacation.com president and CEO Steve Tracas told the trade press here.

 

Tracas said that the cruise lines should protect commissions for the next 18 months to ensure the health of the travel agency businesses that the cruise industry relies on for 90% of its sales, especially as 70,000 more berths are scheduled to be added through 2012.

 

Cruise lines, he said, have a concern about how they could pull back on protected pay on promotional fares once pricing returns to traditional levels but Tracas contends that the agency side of the industry will understand that pull back as normalcy returns.

 

He noted that as public companies, the major cruise lines are under pressure from Wall Street to cut their distribution costs. Wall Street analysts like to hold up the airline industry as the model for containing distribution costs.

 

But the airlines are not profitable and are seeing declining demand for their services, Tracas said, pointing to the irony of that distribution model. Indeed, he was asked if the Canadian airlines' increasing their commissions to Canadian agencies in order to fill their planes and increase business traffic could portend similar moves by US carriers.

 

Tracas said that the commission moves by the airlines are a sign of the times and not necessarily a sign of a future rapprochement with agencies by airlines. However, he noted that agencies should take the airlines' money while they can get it.

 

He added that the Wall Street pressure on agency cruise commission costs is shortsighted because travel agents produce higher yield and higher per diem sales for cruise lines, as they do for hotels and indeed airlines.

 

(Source: Travel Trade)