By Asgar Hussein

A decision by SriLankan Airlines which chairs the Board of Airline Representatives (BAR) to reduce the agency commission from 9% to 7% from next month has angered travel agents.

It has also caused a rift with the Director General of Civil Aviation who has not approved the reduction. He has held that such decisions require his prior approval.

SriLankan Airlines and BAR have basically stated they have to reduce the agency commission because their costs are too high.

The national carrier has also decided to ignore the order by the Director General of Civil Aviation Lal Liyanaarachchi not to reduce the agency commission. It has held that a company has the right to decide how much commission it should offer to agents.

However, travel agents claim this measure will significantly lower their income. They point out that of the 9% commission they concede 5% to the customer. This means they retain only 4%, and therefore reducing the commission by 2% is a big blow.

Travel agents (represented by the Travel Agents Association of Sri Lanka and IATA Agents Association of Sri Lanka) protested against the decision saying all airlines enjoy a very good yield in this market. They also said the accepted agency commission globally and regionally is 9%. They further feared that their business would suffer if the decision is implemented.

The travel agents have made representations to the Director General of Civil Aviation Lal Liyanaara- chchi on this issue.

He had held that granting approval for airline tariff is a subject that comes under the direct purview of his office, and a circular issued by Sri Lankan Airlines in this regard undermines the authority vested in him.

He also informed the Chairman of the Board of Airline Representatives (BAR) M. Fazeel that he regretted to note that BAR has decided to implement their proposal to reduce the agency commission notwithstanding the decision of his office.

Liyanaarachchi had reiterated that the agency commission falls within the definition of tariff, which is regulated under Ceylon Air Navigation Regulation 118, promulgated under the Air Navigation Act No. 15 of 1950. He added that hence only the Director General of Civil Aviation is empowered to take decisions involving this matter.

He also stated that any resolutions made by IATA or any other body does not come into effect in Sri Lanka unless his office, which is charged with the administration of civil aviation affairs, approves such resolutions specifically.

Liyanaarachchi also requested Fazeel to bring to the BAR membership's notice that the requirement of tariff (including the agency commission) being approved by the state has been agreed upon in all Bilateral Air Services Agreements (BASA) that Sri Lanka has concluded with all states that the membership represents. He added that non-adherence to the directions issued by his office would result in serious repercussions due to non-compliance with the BASA, which would be dealt with appropriately in pursuance of Air Navigation Regulation 253.

BAR has stated they have taken full cognisance of Regulation 118 promulgated under the Air Navigation Act. No. 15 of 1950 in arriving at their decision to reduce commission payable to agents. They said that in implementing this decision, they have not acted in violation of that regulation or of any bilateral air service agreements concluded by states which their membership represents.

Airlines also feel that agents could retain the entire commission paid to them rather that offering a concession for the customer.

BAR late last year stated that most fares in the region are higher than fares ex-Colombo. They also claimed that with the depreciation of the rupee it is not the travel agents but the airlines who have lost out. They added that IATA and market fares have not matched the currency depreciation.

BAR had also reiterated that levels of commission granted to travel agents are the prerogative of the airlines as provided under the applicable IATA resolutions.

Liyanaarachchi had acknowledged that consequent to tragic incidents, the entire aviation industry in the world has been badly hit, and the volume of traffic and demand for air travel have declined drastically diminishing airlines' revenues whilst operating costs have escalated significantly.

He added that on such occasions it is natural that airlines tend to review all possible avenues where cost would be reduced for yield improvement.

Liyanaarachchi had however maintained that when the market is shrunk, travel agents are also badly affected, and consequently have to face a greater difficulty in the maintenance of infrastructure and employment of staff due to reduced income. He added that depletion of revenue of travel agents would lead to cost cutting measures where staff retrenchments would be a prominent feature.

He noted that Sri Lanka airfares are relatively high compared to rates of the neighboring countries/destinations and hence airlines can enjoy a better yield in Colombo.

Liyanaarachchi had held that sufficient safeguards are already available to airlines to take care of their commercial interests without resorting to reduction of agency commission.

It is learnt that Liyanaarachchi is presently seeking the advice of the Attorney General on the legal position of this matter.

Travel agents claim that with the exception of Sri Lankan Airlines which chairs BAR, the other members of BAR had agreed to abide by Liyanaarachchi's decision. They also claim that according to civil aviation law, the director-general has the authority to decide on tariffs and commissions.

It was also alleged that the smaller travel agents have relented (under pressure from SriLankan Airlines) and have agreed to reduce their agency commission by 2%. However, most of the larger companies have decided to fight it out.

Travel agents charged that airlines are taking advantage of the Market Development Programme (MDP) to increase air fares at their discretion. They also alleged that air fares have increased by around 22% on average within the last year, and claimed that though they voiced their disapproval, it fell on deaf ears.

One travel agent said, "An objective of having the MDP was to bring about a healthy market condition for the airline as well as the travel agent. But unfortunately, it has been used to benefit only them and edge us out, and now to eat into our commission which has been 9% ever since the inception of the travel industry 30 years ago."

The Sri Lanka Institute of Marketing (SLIM) continues its collaboration with the Accredited Advertising Agencies Association (Four As) towards fashioning its annual awards for the advertising and marketing communications industry in line with new trends in the field. An important feature of the awards this year will be the consolidation of a number of 'Marcom' awards, together with the traditional advertising awards for various product categories. While a few such Marcom awards were featured in previous years, this year 10 such award categories in areas ranging from direct response marketing and corporate promotional material, to public relations, internal marketing, event marketing, packaging, promotions, interactive marketing, outdoor and point-of-sale have been included.

In media advertising, there are 12 product categories ranging from food to finance with a new slot for the fast developing 'retail advertising' category. These will be judged with separate awards for the print, radio and TV media. Transnational advertising too has been included as a stand-alone category to accommodate advertising adapted from concepts generated abroad by multinational marketers.

All in all, there will be 145 awards, including four grand awards for the 'Best TV, Radio and Print Ads' and the 'Campaign of the Year.'

"SLIM and the Four A's have worked with a fine sense of collaboration through a Joint Blueprint Committee to review the awards, accommodate different viewpoints and introduce innovations that reflect new trends in marketing communications" states SLIM President, Nalin Attygalle.

The 13th annual awards event will be held on March 9, following a February 1, closing date for entries and judging by a nine-member panel shortly thereafter. The panel will comprise three eminent marketing professionals and six creative professionals from the advertising industry. Among these will be two foreign judges as well as local judges well versed in the idioms of vernacular advertising.

Four A's President Lilamani Dias Benson observed that "The worldwide recession is proving to be a vital learning experience for advertising and marketing professionals. When times are good you need to advertise to stand apart. When times are bad you need to advertise to gain an unbeatable advantage."

SLIM and the Four A's will underscore this theme in designing and conducting the awards ceremony.

Srilankan Airlines recently tied up with SasiaNet, the internet-based reservations service provider for the services of Roomsnet, its state-of-the-art automated interactive hotel reservation syste, which will help to position Sri Lanka as an ideal hub for air travellers as well as promote the country as an adventure, special-interest and eco-tourism destination.

Roomsnet, which will be implemented in phases, will enable Srilankan Airlines' overseas stations to directly book passengers in hotels in Sri Lanka during their layovers in the country.

On feeding the passenger's travel information into the system, Roomsnet will automatically book the passenger into a hotel which his travel entitles him to. The hotel voucher will then be handed over to the passenger on arrival at the airport in Sri Lanka.

Srilankan Airlines is already online with Phase I of Roomsnet, where its overseas stations route the travel information through the airline's reservation system to its head office, which makes the booking on Roomsnet. The hotel voucher is given to the passenger on arrival at the airport in Sri Lanka. In phase II, overseas offices will be able to make bookings directly on Roomsnet.

In Phase III of Roomsnet, customers who wish to make a longer stay in Sri Lanka can make their hotel bookings through Srilankan's overseas offices. This facility is offered free of charge to all hotels in the island and will help to promote frequent individual travel.

Roomsnet will allow hotels to drive their own business, instead of being dependent on contracting business a year ahead at low rates. It allows for dynamic and rapid pricing changes on the part of hotels in meeting changes in market situations, without the cost of having to print new brochures as traditional marketing methods would require.

In Phase IV, Srilankan Airlines will be able to offer packages for adventure, special interest and eco-tourism holidays through Roomsnet to customers overseas. In this way, Roomsnet will help to promote holidays in Sri Lanka.

Following is a statement issued by Standard Chartered Bank with regard to the ongoing labour issue:

The acquisition of the Middle East and South Asia operations of Grindlays Bank by Standard Chartered Bank in August 2000, resulted in two major international banks coming together in Sri Lanka. This acquisition significantly increased the investment and presence of Standard Chartered Bank in the country.

The bank has been going through a process of integration since then, which has involved streamlining the operational aspects of the two banks and introduction of new technology. Whilst it has also impacted on the number of jobs, it has also created new opportunities for a number of staff. All divisions which functioned independently before, have now been integrated, which has resulted in two divisions becoming one for the purpose of operations. The acquisition and the need to remain a viable commercial operation, especially in the current economic times, internationally as well as within the country, have necessitated a restructuring of the bank.

Those staff who were identified as surplus, were offered a voluntary retirement scheme. This scheme was based on an employee's age, years of service, and remaining number of years up to retirement. A substantial number of staff accepted the offer and left the services of the bank voluntarily. As per the labour laws of the country, the bank had to refer the matter of the remaining surplus staff to the commissioner of labour. An inquiry has now been initiated by the commissioner into this matter. This is the legal route available to any employer in Sri Lanka under the present labour laws.

At a time when some of the other international banks in the country have decided to exit from Sri Lanka, the Standard Chartered Group has significantly enhanced its presence through the acquisition. In the current year, the bank will focus on strengthening its consumer business, specially in the areas of credit cards and consumer loans. Plans are currently underway to enhance the product features as well as explore opportunities to expand the product range by introducing products already available in other parts of the Middle East and South Asian region.

As an acknowledge-ment of the banks regard for Sri Lankan talent, Standard Chartered has created a Regional IT Development Centre in Colombo. This centre currently employs 18 staff and is expected to grow to 30 in the next one year. This development centre is currently working in tandem with the Regional Centre in Dubai, to create a new browser based processing platform for the Middle East and South Asia region. Sri Lanka was chosen for the centre since a majority of the bank's IT developers/programmers in its Regional Centre in Dubai, are Sri Lankan and some of these were seconded from the Sri Lankan operations.