Will WestJet follow Air Canada's lead?

Following last week's news that Air Canada changed its Domestic Canada Cash Rewards program by eliminating the seven per cent commission on Tango fares and reducing commission on all other fare types to four per cent, many travel agents and agency owners reacted by pledging their allegiance to WestJet.

Not so fast, others are suggesting, as speculation builds about whether the Calgary-based airline will mimic the change for its own commission structure.

"This is a significant announcement," said Lyell Farquharson, WestJet vice-president, sales, in response to the news. "Anytime there is a wholesale change in our industry, we would be remiss if we did not take the time to review the situation."

Farquharson told PAX that the airline will undertake this review and its implications, however, there is nothing to announce at this time.

WestJet's commission currently sits at seven per cent for Econo, Flex and Plus fares.

Prior to the changes, Air Canada also offered seven per cent for web bookings on Tango, Flex and Latitude fares, plus five per cent on Business Class bookings.

The competitors have a history of following suit when it comes to commission adjustments. In 2009, WestJet cut its commission to four per cent from nine per cent, and Air Canada responded by introducing a four per cent commission on Tango fares, which previously, was zero. Shortly thereafter, both then moved to seven per cent pay-outs.

Responding to the most recent changes, David McCaig, president of the Association of Canadian Travel Agencies, addressed the issue in his latest President's Podium note.

"We are discouraged to learn that those agents who deal with a large percentage of customers whose focus are Tango bookings will have to come up with a plan to up sell and if they don't, will see a drop in their agent revenue from Air Canada," he said. "...If you have been selling A LOT of Air Canada Tango fares online then you need to rethink how you are selling Air Canada before April 1st."

Air Canada will now be offering commission on GDS bookings for Domestic fares (excluding Tango), and as such, McCaig called on travel agents to "take advantage of the GDS earning opportunities," noting that, "agencies who make the bookings through a GDS will see their productivity go up."