Suppliers need to start getting money into agencies' pockets sooner, according to ASTA.
The Society’s senior vice president and general counsel, Peter Lobasso, issued a statement Thursday calling on suppliers to change the way they pay commissions to agencies.
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Most commission payments have historically been received at or soon after the client's time of travel. But the coronavirus pandemic, with mass cancellations and little demand for new travel, "has shed new light on the intrinsic unfairness of the situation," Lobasso said.
Payment upon booking, he said, would be "ideal," but ASTA believes payment should come "no later than 14 days after the date of receipt of full payment from the traveler" and "not [be] subject to recall should travel be canceled for any reason not attributable to the acts or omissions of the advisor."
"While we certainly acknowledge the impact of the pandemic on our supplier partners, as well, we hope that our call will be viewed as an opportunity to work together to achieve a mutually beneficial new solution," Lobasso said.
Some suppliers have already taken steps to provide earlier payments on commission, which ASTA applauded.
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Lobasso argued that delaying commission payment goes against "the centuries-old common-law rule which provides that a commission is deemed earned when the agent provides the seller with a ready, willing and able buyer on the seller's terms," and advisors should be paid at time of booking regardless of what happens afterward.
While suppliers might argue commission should be paid after travel to protect themselves from a dispute or chargeback, Lobasso said, the risk of that happening should be on the supplier, not the agent.
"Adoption of a more equitable payment schedule will not only assist travel agencies to better weather the inevitable economic downturns of the future but will also help to ensure the viability of a distribution channel so critical to the suppliers' own success," Lobasso said.