Northwest & KLM Airlines Eliminate Commissions to Online Agents
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Just one day after going through a 6.8 magnitude earthquake, Expedia was hit by a decision that could ultimately cause it to charge consumers service fees. A decision by Northwest Airlines and KLM Royal Dutch Airlines to eliminate commissions on online travel bookings took effect today. Up until today, Northwest paid Internet sites a commission of 5 percent (capped at $10) for each ticket.
While the move by Northwest and KLM might force Expedia to pass the cost onto the consumer, the Bellevue-based company is continuing to conduct business as usual.
Expedia spokesperson Suzi LeVine told seattle.internet.com that Expedia is currently involved in ongoing discussions with Northwest. According to LeVine, Expedia was not surprised by the decision and has already been preparing itself for such action by diversifying its business. "Airline commission-based business is only 25% of our revenue," says LeVine.
While Expedia may not have decided to charge consumers yet, its competitor Travelocity has decided to go forward with such action. The Texas-based company announced that it will charge a $10 service fee on all Northwest and KLM tickets. "We are surprised that Northwest and KLM would put themselves at a competitive disadvantage by forcing us to charge a service fee that we must now pass on to consumers," says Terrell Jones, president and CEO of Travelocity.
Although the $10 service fee may not make online consumers very happy, it is worth noting that most brick and mortar travel agencies charge service fees of $20 or more on all tickets.