Qantas and travel agents: time for a reset?

Could the row over Alan Joyce's Qantas exit pave the way for a refreshed relationship with the travel trade? BRUCE PIPER reports.

THE shocking revelations which have emerged about the Qantas Group over the last two months or so – which led to the early demise of CEO Alan Joyce’s career yesterday – have brought into the mainstream just what travel agents have endured from the airline for some years now.

The airline’s relentless focus on the financial bottom line has seen its former stellar reputation in tatters, as blow after blow revealed allegations of deception over outstanding credits, sneaky attempts to curry influence, and even the selling of tickets for flights which had already been cancelled, now the subject of a major Australian Competition and Consumer Commission (ACCC) prosecution. And that all came as the carrier battled hard to improve record low customer satisfaction scores over its ageing fleet, poor on-time performance and sky-high ticket prices. The mainstream media has been poring over the corpse in recent days so I’m not going to revisit everything in gory detail, but it truly has been a horrific period for the company which has had its true character exposed – and like a lot of naked bodies, it’s very very ugly.

But much of this is little surprise to travel agents, who despite being beaten and battered by Qantas’ obvious disdain, continue to distribute the airline’s products for seemingly ever-decreasing rewards and indeed outright attacks on their business model by the diminished national carrier.

Death by a thousand cuts

Airline distribution is indeed a complex landscape, so it’s not surprising that the difficulties imposed on travel resellers in recent years haven’t really entered the consciousness of the travelling public. The first major assault was the introduction of the so-called “Qantas Channel” which was announced with a fanfare by – guess who – newly minted Qantas CEO Vanessa Hudson, who was the airline’s Chief Customer Officer when this first blow was struck back in February 2019.

Newly minted Qantas CEO Vanessa Hudson

Part of a broader digital strategy to enhance the airline’s booking systems, travel agents who signed up for the much-vaunted Qantas Channel were promised a new world of product sourced from the NDC-enabled Qantas Distribution Platform. The carrier cited agreements from key players including Flight Centre, Helloworld, Webjet, Corporate Travel Management, Consolidated Travel and even Virtuoso, and also confirmed partnerships with Sabre, Amadeus and Travelport to deliver the new solution.

While touted as embracing new technology, the sting in the tail of this move was a requirement that agents signing up for the Qantas Channel also had to sign a new agreement with their technology provider (GDS) which lo and behold removed all those segment rebates which previously made up a not insignficant part of the revenue mix for travel resellers, particularly in the corporate market. At the stroke of a pen this was removed, with Qantas adding insult to injury by also imposing a $17.50 “channel fee” for any bookings made through traditional GDS (EDIFACT) technology.

Hudson’s release touted the 2018 launch of the Qantas Distribution Platform, noting that “Australia’s national carrier [is] leading the Asia Pacific region in unlocking the value IATA’s New Distribution Capability (NDC) can deliver airlines, trade partners and customers”. Given QF’s recent bumper profit announcement it appears that thus far the value has certainly been unlocked for airlines – but for trade partners, not so much.

Many travel agents were deeply concerned at how Qantas effectively mandated the switch to the Qantas Channel, but despite this at the time there was curiously not a single peep of official protest from the then Australian Federation of Travel Agents.

And now more than four years on, many of the potential benefits of the Qantas NDC solution – differentiated commission, incentives for particular routes, recognition of frequent flyer status – are only just starting to roll out, with little revenue upside for beleaguered travel agents who also continue to grapple with the evolving serviceability of NDC bookings.

Commission – what an outdated concept!

The next major impost on travel agency bottom lines imposed by Qantas was the decision to “renegotiate our arrangements with travel agents” six months or so into the COVID-19 pandemic  in late October 2020. Speaking during the Qantas Annual General meeting, now departed CEO Alan Joyce claimed the initiative would “create better selling opportunities for the trade and significantly reduce our cost of sale” but at the time declined to provide further details.

The recently departed Alan Joyce

The hammer blow fell a few months later, on the 20th May 2021 when Qantas announced the reduction of travel agent base commission on international flights sold by Australia-based travel agents from 5% to 1%. This effectively reduced travel agency incomes from selling Qantas fares by a whopping 80% – but the carrier generously tempered the news by promising the trade would remain an “important partner for the business”.

“Qantas’ changes to international commission are in line with global trends,” a statement from the airline noted, pledging to “work with the agency community to develop ways to evolve their business models and grow again”.

“We expect the change will also accelerate the tend towards a fee for service model, compensating travel agents for the added value and bespoke services they provide customers beyond the logistics of booking, particularly for managing complex itineraries”.

Ironically at the time when travelBulletin questioned Qantas Executive GM of Global Sales & Distribution, Igor Kwiatkowski and Executive Manager Stephen Thompson about how much axing of agent base commission would cost the carrier, the answer was “in the tens of millions of dollars a year” – practically a rounding error when compared to the bonanza multi-billion dollar results recently announced by the airline. You’d have to ask whether all the angst that move has created has been worth it for such a relatively small saving in the scheme of things.

ACCC collateral damage?

The timing of the announcement from the Australian Competition and Consumer Commission that it was planning to prosecute Qantas for selling thousands of seats on “ghost flights” which had already been cancelled just couldn’t have been more exquisite. Joyce and his offsiders had already endured a hellish grilling by a Senate committee during which Jetstar CEO Stephanie Tully eventually admitted, through somewhat gritted teeth, that credits owed to her airline’s passengers amounted to some $100 million. That boosted the previously announced figure which it turned out had only related to Qantas flights booked by Australian passengers – not Jetstar, and not flights booked from overseas which still remain unquantified.

Caught out in this moment of breathtaking duplicity, I suspect this is when Joyce began to see the writing on the wall and firmly strapped on his parachute – because it was just 24 hours or so later that Qantas announced an award of more than $10 million in previously deferred bonus shares to the not-so-shamefaced CEO. The carrier rapidly backflipped on plans to force all the credits to expire at the end of the year, which would have added a tidy half a billion dollars to the 2023/24 bottom line, and changed the conditions for Jetstar redemptions as well.

And while the impact on the public of all those hard-to-redeem credits has been widely documented, again what has not been well communicated is the massive impact on travel agents who have literally spent the last three years rebooking, managing credits and dealing with all those cancelled flights, for little or no remuneration and certainly minimal recognition from Qantas, that self-described “important partner”.

And speaking of partners, the deep relationship between Qantas and Emirates means the middle-eastern carrier may also be skating on the edge of its own involvement with the ghost flights scandal. A number of travelBulletin readers have pointed out that all of those cancelled flights where tickets were still being sold also carried an Emirates flight number, with some describing EK as an as-yet-unindicted “accomplice” in the scandal.

What about the NTIAs?

When it comes to partnership with the travel industry, Qantas’ true colours were also revealed last year when the airline put the kybosh on its longstanding major sponsorship of the National Travel Industry Awards. In the 2000s and 2010s, even as it developed its own direct booking capabilities and removed any call to action to travel agents from its advertising, Qantas still maintained at least the illusion that it cared about travel resellers through this major industry event each year.

Qantas actually worked extremely hard to maintain a stranglehold on the NTIA sponsorship and at the same time build relationships with the travel trade. Year after year Qantas had a huge presence, with the NTIAs featuring performances from the talent appearing in QF television ads such as the Australian Girls Choir (I still call Australia home), Silverchair’s Daniel Johns (Atlas) and Martha Marlow’s It feels like home. The airline actually even cared about winning the NTIA Award for Best Domestic Airline – I can still remember the relief from one senior QF executive when the carrier finally wrested that category away from Virgin Australia after a number of years. Qantas also appeared to relish the opportunity to locking out major competitors such as Singapore Airlines from NTIA sponsorship – meaning SQ was only too happy to generously take up the opportunity to secure a multi-year deal with the Australian Travel Industry Association as NTIA major sponsor into the future – even as that airline at the same time rejigs the landscape of its travel agency relationships.

Former Australian Federation of Travel Agents CEO Mike Hatton labelled the Qantas NTIA pullout as a disgrace – and the same attitude to resellers appears to continue, with minimal or no Qantas presence at all at some recent travel agency group conferences. Any casual observer would have to conclude that Qantas sees its “industry partners” as competitors whom it wants to see disappear, rather than recognising the vital role the travel trade play in the aviation ecosystem.

Time for a fresh start?

As the popular song goes, given the current state of the relationship between Qantas and travel agents “things can only get better”. Perhaps the circuit breaker effect of Joyce’s departure, as well as that of some of his other like-minded lieutenants such as former QF domestic chief Andrew David, provides an opportunity for a reset.

Certainly the airline’s recently appointed Head of International, Cam Wallace, enjoyed a great reputation with the trade in his former Chief Commercial Officer role at Air New Zealand. Let’s hope he can convince his colleagues – and boss Vanessa Hudson – that travel agents are not actually the enemy, but given a modicum of encouragement and decent treatment can potentially once again become advocates for the beleaguered airline.

Goodness knows, in the current environment Qantas needs all the friends it can get.

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