Read more »

"/>

KLM Goes with Net Fares

As you likely know, airlines give essentially the same fares to all distribution points, and pay commissions and/or overrides to those fares to travel agencies (in some cases). In Europe, that is beginning to change. Led by a similar move by SAS, KLM is changing to a so-called net fare system in the Netherlands and Scandanavia. A net fare means that KLM does not pay a commission; rather, it subtracts the commission from the fare it gives to a travel agent, allowing the travel agency to mark up the fare whatever it wants. KLM also will charge consumers who buy directly from the airline a fee based on where they make the purchase ($12 for a web booking, up to $55 for an offline booking).

This changes the airline ticket model from a commission-based approach to a wholesale approach, giving distributors more flexibility to compete (or charge whatever service fees they’d like). It’s a significant change, and a way to appease distributors who are getting tired of shrinking commissions.

(editor’s note: Yes, I know, it’s not the funniest or wackiest story in the world, but it’s a new way of doing business and I thought I’d make you choke down your metaphoric brussel sprouts this morning. Carry on.)

Did you enjoy this post?
Sign Up to Receive 1 Email Each Day
Join the more than 7000+ people who get 1 email each day with all the airline news, credit card ideas and general nonsense we've provided for more than 10 years.

Leave a Comment


NOTE - You can use these HTML tags and attributes:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>