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China Southern to replace commission and overrides by flight segment fee

06/02/2016| 6:57:24 PM| ChinaTravelNews 中文

China Southern Airlines, Asia’s largest carrier by fleet size, plans to replace Z Value commission and rebate with fee per flight segment for domestic ticketing agents, effective July 1.

ChinaTravelNews, Mark Guo – ChinaTravelNews learned on June 1 that China Southern Airlines will roll out new commission rules for domestic ticket agents on July 1 that will have Z Value (“Z值”) commissions and rebate incentives suspended, to be replaced by agent fees per flight segment.    

The fees will range from RMB 5 to RMB 25 based on the flight segment and the seat type, in lieu of commissions or overrides, and agents will have to provide printed VAT (value-added tax) invoices every month. 

Detailed rules of the carrier’s domestic agent fees are as follows:  

1) Eligible agents must be endorsed by China Air Transport Association (CATA) and sell at least RMB 80,000 of air tickets each month.  

2) The Z Value (“Z值”) commission and rebate incentives will be suspended from July 1, to be replaced by agent fee per flight segment.    

3)  The fee structure for domestic agents is as follows: 

Group ticket, child ticket and infant ticket: no fee. 
Exclusive routes ticket, corporate ticket and GP (Government Purchase) ticket, based on specific discount standard: RMB 5-25 per flight segment. 

4) Selling standard products through third-party channels is prohibited.  

Starting from July 1, all ticketing agents are prohibited from using third-party C-end or B-end platforms to sell the carrier’s standard products (single-trip, round-trip, open-jaw tickets or ticket packages with low-value standardized add-ons such as insurance or coupon). Packaged or portfolio contents with China Southern tickets to be sold on third-party platforms must be approved by the carrier, and the third-party platforms must have authorized agreements with the carrier. 

China Southern will sign authorized agreements with major C-end platforms that meet the carrier’s requirements, and allow the platforms to introduce ticketing agents approved by the carrier to sell tickets on those platforms. Packaged tickets or portfolio contents must also be approved by the carrier before they can be sold on those platforms. 

5) B-end platforms are only allowed to sell designated tickets on their own websites, and they are not allowed to sell unbundled tickets or packaged tickets on all third-party platforms. 

6) Agents must re-sign distribution agreements with the airline, and the collection of applications for agreement update will end by June 25.  

Jiangyun Ning, a ChinaTravelNews commentator, said that fees by flight segment is better news than the previous format of payment by ticket volume, but it is still questionable whether the fee is enough to cover the agent’s cost for issuing a ticket. 

ChinaTravelNews reported earlier on the airline giant’s redefined rules on domestic ticket agent on March 28. (Translated by Jerry)

TAGS: China Southern | ticket agents | distribution
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