OTA Commission on Airline Tickets
What is the typical commission fee that OTAs get from airlines?
Thank you for the question.
Airlines used to pay commissions to travel agencies for reselling their tickets but they rarely do it today. Commission cuts started in the 2000s and these days they’ve been brought down almost to zero. Though, airlines still give agencies a productivity-linked incentive of two percent on average.
If not commissions than what?
These days, OTAs rather make money by topping the flight price with markups. OTA’s commission engine adjusts markup sizes depending on a number of factors like current demand, competition, season, etc.
Agencies have other income streams like service fees, consultation or planning fees, insurance costs. In addition, OTAs provide other services like hotels or car rentals where the commission situation is more favorable.
Besides that, OTAs have agreements with some airlines that allow them to negotiate more favorable terms for selling their tickets. Usually, it means aligning with a host agency or consortium.