ACTA Planning Meetings With Cruise Lines Over NCFs
Open Jaw

ACTA head David McCaig sayd he is planning meetings with cruise lines in an effort to to improve partnerships between travel suppliers and travel agents. The organization is concerned about the growing frustration among travel agency heads against some suppliers.

“We hear from members that some cruise lines are great, and this shows suppliers and agencies can work well together and prosper,” says Mr. McCaig. He notes some river cruise companies are applauded by many agencies for paying commissions on all-in fare prices and for providing consumers with straightforward prices as well as excellent cruise values. ACTA recently surveyed members and found growing dissatisfaction with ocean cruise suppliers but even among major cruise lines, there were some with reputations for treating travel agencies as equal partners, said Mr. McCaig. But many comments show agents are unhappy with a growing trend by the large lines to declare more revenue as non-commissionable fees (NCFs) and to add seemingly unjustifiable amounts to the so-called ‘tax’ column.

ACTA believes that all price components except for taxes levied by Acts of the federal and provincial Parliaments should be commissionable because they are normal costs of doing business. This includes port fees, landing fees, security and airport improvement fees, fuel surcharges and other charges, fees and surcharges charged by government agencies and other public or private bodies.

ACTA quotes one agent as saying, “I’ve just booked another group with RCCL; cruise only for 300 people for a group out of Toronto. One cannot help but be annoyed with them charging commissionable rate of US $539.00 per person, which is an excellent group rate; however the NCF is $100.00 per person, $30,000 in total. The total taxes for this cruise are only $44.00.”

Another agent responding to ACTA’s survey underlined the dollar values involved, “Attached is an invoice from Holland America (HAL) and one from Princess. We are ‘supposed’ to be receiving 13% and 15% but by the time the smoke clears we make about 5 or 6%. And this totally affects our level of commission as the cruise lines base our commission on ‘base’ fares. We don’t receive commission on the air or tax or the non-commissionable fees.” This agency says it gets about two thirds of its expected credit for commissions on base fares from HAL, amounting to a loss of about $100,000 for the year.

The agency also submitted to ACTA an Oceania invoice showing the total for a cruise fare of $21,598.00 but including a non-commissionable fee in the base fare of $1,498.00 with another non-commissionable fee for air of $2,400.00. The result for the agency is a 13% commission on $17,700 instead of the full $21,599 charged by the cruise line to the consumer. This is a difference in the commission to the agency of $506.74 which, as the agency head writes, “is huge to us!”

And an example from an agency booking an Alaskan cruise on a Holland America Line vessel points to a cruise fare of $699 which includes $116.57 labeled by the cruise line’s invoice as government taxes and an additional $235 in NCFs that the line said, when asked, was ‘mainly’ port fees. Out of the total price of the cruise paid by the consumer of $815.57, the travel agency grossed $69.40 which was about as much as the agency spent on documenting the cruise.

Another example shows a total cruise fare from Princess Cruises of $1,256 charged to a consumer. In addition, the consumer paid $86 listed as government fees and taxes but there was no breakdown as to what part was a tax and what part was another kind of charge. The agency was told it would not be paid commission on the taxes or government fees or on another $250 which was part of the cruise fare. The agency was not given a reason why this amount was a non-commissionable fee. As well, the agent complains, “No mention of NCF included in fare, so the consumer is to assume that we are making commission on the $1,256.00 when we are not.”

Seabourn Cruise Line is a very popular company with consumers but one agency tells of a Seabourn quote for a 38 day voyage in August on the ship Sojourn. The quote is for $20,450 per person but the non-commissionable fees to the agency are $2,584 per person equaling 12.6% of the total base fare.

On the other side of the scale in the low ticket market, Princess offers a seven-day Caribbean cruise for $799 which includes $175 (21.9% of the total base fare) in fees which return no commissions to agencies selling this cruise for Princess.

Agencies are annoyed that cruise lines demand increasing work from the agents while reducing the amounts on which the lines pay commissions to agencies.

A common theme of the agencies is this comment from one agency head, “I also find that we are doing all the paperwork for the cruise lines re: documents, baggage tags, and entering passenger information that is only allowed to be entered on the web. I find this most disturbing as we are spending three times more time handling bookings this way. We do not get paid any additional commission for printing off documents for the cruise lines, or having to spend hours trying to figure out their websites in order to add (passenger) information.”

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