Court rules against Qantas on commissions

Travel agents across Australia have won a major court case which could see Qantas forced to pay million of dollars in ticket commissions the airline has withheld for almost six years.

A unanimous judgment, handed down yesterday by a full bench of the Federal Court of Australia sitting in Sydney, concerned Qantas failing to include fuel surcharges when calculating the commission paid to agents on international ticket sales.

In evidence to the Court, Qantas said the cost of paying commissions on fuel surcharges up to 2007 would be more than A$26 million. This figure will have increased considerably over the past four years.

The appeal victory is part of a class action by travel agents against Qantas, Air New Zealand, British Airways, Cathay Pacific, Singapore Airlines and Malaysian Airlines, which was filed in the Federal Court of Australia in December, 2006.

Lawyer Steven Lewis said the case could have major implications across the international airline industry: “The Court has made a very clear ruling that the fuel surcharge is part of the ticket price on which commissions must be paid.

"The matter was run as a test case to establish the law as it applies to Qantas and the other airlines involved in the class action.

“The time has now come for the airlines, which have been using the fuel surcharge to bolster the bottom line since it was introduced in 2004, to stop fighting the travel agents and resolve this major problem.

“The Court has made a decision in favour of the travel agents and the airlines should now sit down, do the right thing and negotiate a settlement."

The downside is that fuel surcharges, if and when they return, will be higher to cover the cost of additional commissions to agents.

Whatever the detail, such pressures will merely encourage airlines to move even more of their business to the internet - and away from agents. Perhaps not such a clear cut victory after all.