New distribution model for 2005

29. June 2004

SWISS will introduce a new distribution model as of January 1, 2005. The new model will provide greater cost transparency, as it will show the services of the airline separately from those of the travel agent. The commission SWISS currently pays to travel agencies will be eliminated. In future, travel agencies will charge their customers directly for their services. The Swiss Federation of Travel Agencies was consulted in the development of the new distribution model. SWISS has informed the travel agencies in writing of this change.

As far back as the summer of 2003 SWISS first announced its intention to introduce a new distribution model as of January 1, 2005, in keeping with changes taking place throughout the air transport industry. The combination of over-capacity and the emergence of low-cost carriers have altered the competitive environment and compelled airlines to reduce costs, especially on the distribution front. At the same time, fares on many routes have fallen sharply, while the percentage commissions travel agencies receive from airlines make a constantly declining contribution to agency profitability.

When selling a ticket for a flight, a travel agency provides a service for the customer and the airline. As of January 1, 2005, the services that the travel agency performs on behalf of the airline will be charged to the customer, in the form of a fee for ticket issuing or information provided. These charges will replace the commission currently paid by the airline. As of January 1, 2005, SWISS will also charge a service fee on tickets sold directly (via website, call centre or ticket office). The amount will be CHF 50 per ticket for flights within Europe and CHF 80 per ticket for long-haul flights. A service charge of CHF 25 will apply to tickets booked through the swiss.com website. In order to compete with low-cost carriers, however, SWISS will continue to sell Web Specials and European fares in the two lowest booking classes without applying a service charge.

The principle of charging customers fees for travel agency services has been in effect on the Swiss market for a number of years.

Legal framework

The collaboration between SWISS and travel agent continues to function on the basis of the IATA Resolution 824. The travel agency therefore continues to be the agent for SWISS.

Because SWISS lowered fares by as much as 30% in 2003, no further reduction is planned despite the elimination of the commission to travel agencies.