Carnival Corp. last week took the unusual move of dictating a commission policy across all its cruise brands by eliminating commissions on the air portion of its cruise bookings.

In a letter sent to travel agents on Sept. 12, the company said that the policy would go into effect for new bookings on Oct. 15 for all its cruise lines.

Carnival Corp. brands currently pay 5% commission on the air portion of air/sea bookings. Jack Anderson, vice president of marketing for Carnival Corp. and executive director of the World's Leading Cruise Lines, an umbrella marketing organization for several Carnival lines, said it was not competitive to add commission to the airfare when airlines don't pay it.

"The bottom line is that we are offering air fares that are simply not competitive," Anderson said in an interview.

Royal Caribbean at press time declined to comment on the issue. NCL Corp. did not respond to a request for comment.

Across Carnival Corp. brands, Anderson said that travel agents book air with the cruise company less than 12% of the time. Six to seven years ago, he said, it was 35%.

"Every single year our air utilization has been decreasing," he said. "The only way we can figure out how to offer a competitive air pricing program is to not mark it up for agents' commission."

Anderson, who drafted the letter to travel agents, explained that as air fares have increased Carnival has had to mark them up even further to cover the commission.

"Eighty-eight percent of the time travel agents are booking noncommisionable air ... which they should do; they are going out and shopping for the best air fare for their customer. And all too frequently," he added, "it ain't us."

Anderson said that the effect of the decision would be immaterial to Carnival Corp.'s earnings and that it was about increasing the company's air/sea utilization. "It's important that we offer a competitive home city air program both for the consumer and particularly for cruise only agencies," he said.

Agents expressed outrage six years ago when Carnival Cruise Lines was the first to cut its air commission from 10% to 5%. (At the time, President Bob Dickinson said the move was made to boost air/sea bookings and make the line's air prices more competitive with the airlines' prices.)

Last week, agents contacted by Travel Weekly said that while they were displeased with the new policy, most admitted they were not buying air/sea packages.

"Cruise lines are very expensive in their air," said Bud Smead of Cruise Holidays in Arvada, Colo.

"They are always higher than what a customer can get on their own," said Laure Hristov, owner of Just Cruises and Tours in Delray Beach, Fla. "I feel the customer is best served by booking it themselves and getting a taxi from the airport or paying for transfers from the cruise line. They save a lot of money."

Of the decision itself, Hristov said, "It doesn't really surprise me, nor does it affect me."

Smead said his agency buys air for its customers through other outlets and charges the customer a fee for doing so, but he still disagreed with the commission elimination.

"It's generally bad policy when suppliers -- cruise lines, anybody -- expect us to provide service and not get paid for it," he said.   

To contact reporter Johanna Jainchill, send e-mail to [email protected].


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