View Full Version : Rex joins the commission cutters - but!!!!!!!!!

Eastwest Loco
27th Jun 2005, 12:51
Rex today announced that they were reducing base commission across the board to 1%, but interestingly will still pay "buying groups" who provide them with significant revenue with an at source sweetener that makes them more than viable to us on the coal face.

The commission we are left with at the end of the day is such that I see no need (and this was obviously a point of difference that Rex wished to pursue) to charge a fee for service. I am happy with the percentage, and can make a living at that level where many are charging on everything. They are already starting to shed traffic.

QF on the other hand has forced fee for service on domestic, Trans Tasman and other routes. I can live with the 9 down to 7% plus overide on longhaul.

Take this, and United (went to 7, now back to 9 and making fuel surcharges commissionable) and other non Oneworld carriers sticking to their previous rates, the game is indeed afoot Watson!

We guys and girls at the pointy end have some degree of control of where the traffic goes, and with DJ paying performing agents rather well, JQ cutting big brothers throat with easily sold remuneration to us leaches things are not as ugly as they looked.

Maybe I am my worst enemy. After a previous post, the airlines I mentioned as alternate sells - ie: LA AA CX BA and even SA who operate code share for or on QF suddenly came back to 7%. FJ was already under the thumb on 5%.

Haven't checked Pixie, as seldom use the plate.

Well done Wokka, Jed, Matty and Geoff at Rex. It is nice to see there is some support for those who try to reciprocate.

It's still gonna be a bumpy ride.

Best all


27th Jun 2005, 13:55
Ok mr Loco, for a simple mechanic, what does it all mean in a nutshell?

Eastwest Loco
27th Jun 2005, 14:25
Hiya Redstone.

Simple mechanic doesn't work for me as my father was a LAME, and an engines man. I am aware of the degree of expertise and dedication you need to be a good one. I took my pencils to school in navy blue and purple Pratt and Whitney engine parts boxes.

Unfortunately, the skill level is not passed on through DNA. So - I must hack away at being a simple travel Agent.

Back to your reply and question. Rex has opted to embrace the large sales outlets in Australia who do most of their selling as opposed to QF who have basically said "make your own dollars by charging the punters a fee".

This has given Rex in most cases a point of difference in the market place, in that many or even most agents will not charge the service fee, making their fares significantly lower to the direct buy customer who does not wish to go online and accidentally book June instead of September. The booking engines can be a mother in that regard if you get the cursor in the wrong spot.

There are 2 groups of thought out there. One (QF and friends) are cutting commission to allegedly save in revenue dilution and there are them other dudes (ZL included) who have elected to support those supporting them.

I will admit to getting the pig in me totally over January/February and redirecting revenue away from QF International, using the code shares on the same flights and generally runing with scissors in the face of the inevitable.It made no difference, but cost QF around $300,000 in turnover. It would have cost me a few bucks in the long run too, but bloodying the nose of the megabeast was more important short-term.

There are many like me out there. They impact how many punters you have down the back of the aeroplane you sign out in a very direct way. The above was posted so you know what is going on at the coal face - before they get to the 'drome. QF has gone adversarial, and is throwing out sweeteners like Santa on steroids to re-endear themselves to their onsellers, but Rex has taken a very clever stance which opens the door just a crack to future expansion knowing it has the heavyweights of the Travel Industry (pull your head in here Woomera - no comment required!!) firmly behind them.

I hope this has broken some of the complex rubbish from this side of the fence down a bit.

Best regards


"....heavyweights of the Travel Industry...."



27th Jun 2005, 14:44
can you expand a little more, are you saying that REX are only paying 1% com in general but more to the agents that bulk sell?
why is this pertinent to expansion, it is no secret the company plans to float and is looking to expand and not just regional australia but regional markets further afield

Eastwest Loco
28th Jun 2005, 10:29
I hope so questil.

What I am trying to convey is that Rex are making themselves more consumer friendly by offering the larger buying groups, and no doubt individual agencies with large volume an acceptable level of remuneration that will allow them to sell their services without adding fee for service above the airfare. Simply, those Agents that are supporting them by buying group or directly will be assisted in doing so.

Thus on a Rex $200.00 return airfare, working on industry averages on Sydney Albury return, a reseller would market this at say $225.00 on Qantaslink making $25.00 on the deal. Rex only has to match the deal and some (like me) would sell at face value making $10.00 or at worst an agent that wanted their $25.00 return could add $15.00 and still undercut the QF product by $10.00.

Clever marketing, and price drives the loads that allow expansion. So does taking care of your resellers. The SLF is not silly, at least until they enter an airport. If one carrier applies a formula to purchase a fare for $25.00 per person less than the competition and can provide similar service, then 60% of people will support them, the other 40% being Frantic Flyers with brand B and being paid for by their employer.

Rex is also looking good with experience and wonderfully jaded "lifers" behind the scenes and a nice mix of new blood and experienced management. It is good to see them taking the higher than middle ground in the current reshuffle, and I wish them clear skies. Expansion, unless you have a multi million dollar budget for advertising requires support. Support is earned by taking care of your distribution network. Rex is doing that extremely well in the current climate.

It is also well to note that some Agencies, mine included are pulling up to 8% on DJ where some are getting zip. It is all performance driven, and so it should be.

I hope this makes my stance and opinion a little clearer. It is a time where it is very hard to keep everything in perspective.

Best regards