re:singapore airlines gave flick to flt, page-11

Flight Centre slings Singapore AirlinesMatt O'Sullivan
June 26, 2009
FLIGHT CENTRE has severed its formal ties with Singapore Airlines, after failing to agree on commissions for encouraging customers to book the Asian carrier's fares.

Investors fear other airlines could use the downturn to slash distribution costs. Flight Centre is still in negotiations with Qantas over commissions for the next financial year.

Flight Centre and Singapore Airlines have been at loggerheads for months, with the latter claiming it was asked to pay a total commission of 13 per cent on ticket sales.

The travel agency had been urging staff not to offer Singapore Airlines fares to customers, instead steering them towards one of its preferred carriers.

After announcing the end of the formal relationship yesterday, Flight Centre's boss, Graham Turner, claimed that Singapore Airlines stood to lose more than $150 million in revenue next financial year from not having the travel agency promote its fares to consumers.

"I can assure you that other airlines are jumping over themselves to gain Singapore's revenue," he said. "We know the power is in our hands at the moment in this sort of market."

Flight Centre will still offer Singapore Airlines fares to consumers who ask for them.

Australia's largest travel agency warned in April that full-year profits will fall by as much as 75 per cent, but yesterday insisted the breakdown in talks would not affect its bottom line.

Singapore Airlines has disputed Flight Centre's latest claims, saying that its recent sales promotions had generated more than half the revenue Mr Turner said it stood to lose.

The real test for Flight Centre will be in concluding a new contract with Qantas for sales commissions for the year from July 1. Mr Turner said he was hopeful of reaching agreement with Qantas within the next week.

Some analysts believe other agents could pick up the Singapore Airlines flights that Flight Centre is not pushing. The airline accounts for almost 12 per cent of international passengers who fly in and out of Australia.

UBS has said that the failure of the Singapore Airlines contract is evidence of "continued structural decline" in travel agency commissions.

The Age 25-6-09