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06 Dec 2018

BY James Chapple

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TRFBLI

Jet2holidays to review commission structure but rules out price parity

Jet2holidays will undertake a comprehensive review of its commission structure after paying out more than £70 million to independent agents during 2018.

Alan Cross, Jet2holidays Dec 2018
Sharelines

Jet2holidays to review commission structure but rules out price parity

Jet2.com and Jet2holidays chief executive Steve Heapy told delegates at the Jet2holidays VIP conference last week the business was “always looking at ways to make independent agents more money”.


He said there were “various levers” the company could pull in terms of commission, but warned the bottom line was Jet2 had to strike a balance between commission and operational costs.


Heapy conceded there were occasions where agents made less commission and stressed he understood the frustrations caused by online discounting and price matching.


“Our objective isn’t to screw you guys and pay you as little commission as possible,” said Heapy. “But we have to find that balance between making money and making you money,” adding he wanted to pay independent agents more commission.


Heapy revealed Jet2holidays’ business was currently split 75:25 direct to trade, down from 68:32 in 2015/16 when Thomas Cook and Tui still sold Jet2holidays product, which he said represented a serious opportunity for independents.


Speaking to TTG at the conference, head of trade Alan Cross said there would never be price parity between direct and trade. “Price parity is very difficult to pull off,” he said. “Online is ruthless. It’s not Cook and Tui, it’s the OTAs. For them, a pound really makes a difference. You need to do big numbers to make money.


“No big mainstream operator offers price parity, including Jet2. But we believe we have the best, most competitive model. It’s a pricing model we’ve had for 10 years and it’s worked very successfully.


“We’re currently reviewing everyone’s commission – every consortia, every independent agent – against their productivity to make sure they are making enough money.”


Following the launch at the conference of Jet2holidays’ specialist agent programme, Cross told TTG the operator had previously considered an agency franchise operation, but decided the best model for Jet2 was to channel trade sales exclusively through independent agents.


“If Jet2holidays is full or the price is particularly high because of load factors, they must be able to offer alternatives,” said Cross.


“They are independent travel agents. We don’t want to make them un-independent travel agents. We want to get as close as we can working with them, but we don’t want it to be a dictatorship.”

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