28 September 2000
While Cathay Pacific has no immediate plans to launch
nett fares to consumers in the Hong Kong market, Ian
Callender, the airline's general manager, sales and
regions, said, "That is always a possibility."
Speaking at the Abacus conference in Hong Kong last
week, he said, "Inevitably, we would see the possibility in
the Hong Kong market. We are seeing a trend and if we want
to go on the Internet with a credible fare offering, then
we have to move towards fare transparency."
In his presentation, Callender highlighted industry
trends which revealed that an airline's own website was
becoming a major source of bookings - from 25 percent of
revenues for major European carriers to as high as 70
percent for low cost carriers such as Easyjet.
"If the competitors can do it, we have to follow," he
In making public nett fares in the Singapore market this
month, Singapore Airlines also cited the need for fare
transparency. SIA's move, unprecedented in the Asian
market, was the talk of the more than 800 agents at the
It has left Singapore agents seething in anger at what
they say is the "typical arrogance" of the national carrier
and agents in the region are keeping a close watch on
developments although many believe few national carriers in
the region would dare do what SIA has done.
Said Javier Berenger-Testa, vice president of Mondial
Tours & Travel, Philippines, "Filipinos will always
need travel agents. They need visas to travel
Philippine Airlines is also not a likely candidate to
make such a bold move. In the Philippines, the only carrier
that has cut commissions remains United Airlines.
In Singapore, agents say the next three months will
determine how the chips fall. It all depends on how other
airlines react to the SIA move - will they follow suit or
will they see this as an opportunity to seduce agents with
If SIA's market share, estimated at 53 percent, drops,
then agents say SIA would have to review its stance.
However vice president-sales of SIA, Chia Boon Kuah,
said he was confident other airlines would follow. "The US
has had fare transparency for the last five years."
It is not the issue of fare transparency that is
upsetting agents they say but it is the implication that
SIA now sees it unnecessary to pay agents for the work they
perform on behalf of the airline and wants agents to charge
National Association of Travel Agents Singapore (NATAS)
president) Lee Liat Cheng said, "We take credit risks, we
put up bank guarantees, we train staff, we do the job on
behalf of the airlines - surely that is worth something. We
are not asking for much but a reimbursement of costs."
One agent jested that SIA obviously believed in
"thinking global but acting local".
The Singapore market forms only about 20 percent of the
carrier's total revenues base, yet it has chosen to act in
this small market. "They knew they would be able to get
away with it at home. This is so typical of Singapore
companies," he said.
One school of thought at SIA likens it to a provision
store analogy where store owners have to pay certain
suppliers, especially those of premium branded products,
for their goods to be stocked, and displayed.
SIA sees itself as a premium, branded, product that
consumers will demand and agents have no choice but to
offer the product.
This raises the question. Who does the agent work for -
the airline or the consumer? Do agents sell what they make
money on or do they sell what the customer wants?
Lily Agonoy, a veteran Hong Kong travel agent who is now
operations manager of British Airways, sees it as a
three-party relationship. "The traditional role was, the
agent worked on behalf of the airline. Now they have to
work on behalf of the consumer as well."
NATAS' Lee who runs Anglo French Travel has a simple
answer. "I'm in the business to make money. I've been
making money all the time and this year, I had my best
profits ever. The day I stop making money, that's when I'll
quit. I am a businessman."