BA to end payments to travel agents

BRITISH Airways has announced it will stop paying travel agents commission on from 1 May - and that they will have to add on their own surcharge to generate revenue.

The airline has also said it will cut off commercial relationships with agents selling less than £50,000 worth of its business a year.

Despite chief executive Rod Eddington's purge on costs through his Future Size and Shape programme implemented after 9/11, selling costs still remain high.

The airline's selling costs were £554m during its last financial year, a large proportion made up of payments to the travel industry.

Ian Heywood, British Airways' head of consumer and agency sales said: 'We need to continue to transform our business to remain competitive and to reflect the changing needs of the market and our customers. This is part of a global trend. In many parts of the world, carriers no longer pay commission to travel agents.'

Eddington has continually stressed the need for BA to reduce its cost base as it grapples with a huge pensions bill and low-cost airlines eating into its short-haul market.

The airline expects to knock £300m off its annual costs within the next two years, on top of the savings achieved through Future Size and Shape.

Cost-cutting plans almost led to strikes by ground staff over last year's August bank holiday after they objected to proposed pay increases that they said were to small.

Travel agents have seen their commission payments continually cut by BA following the 2001 terrorist attacks. The airline used to pay agents 9% on sales, but now pays only 1%.