British Airways has been fined pounds 4m by the EC for abusing its `dominant' market position, but Simon Calder finds incentives are the norm in the travel trade
FOUR MILLION pounds is one heck of a fine: British Airways will need to fill around 500 Jumbos with fare-paying passengers from London to New York in order to pay off the European Commission's penalty. The competition authorities in Brussels imposed the fine on BA on Wednesday. Arch-rival Virgin Atlantic had complained that, by increasing commission rates according to how many tickets travel agents' sold, Britain's largest airline was abusing "its dominant position in the market place".

Every big industry has some way of rewarding increased sales; the key phrase behind BA's offence is to be found in the last seven words. As British Airways has around 40 per cent of the UK's scheduled airline business, it is held to have a dominant position. So its incentives to travel agents, ruled the Commission, comprise bullying tactics. For other travel firms, though, incentives - or "bribes," as some agents bluntly describe them - are becoming more widespread as competition gets ever tighter.

"If someone phones you between 1 February and 30 April with a business class flight enquiry," ran an ad aimed at travel agents this year, "it could be the Virgin Atlantic Mystery Caller. If the first airline you mention is Virgin Atlantic, and you refer to one of our special Upper Class features, you will win pounds 100 cash."

The airline's managing director, Steve Ridgeway, says that such advertisements are part of normal commercial practice. "We all have an armoury of promotional tools, and this is just one of them.

"Many agents work very hard for us, and this is another way of making sure, in a very competitive market, that we're maintaining our strength and our lead." Some travel agent bosses are angry at the way incentives are being offered to their staff. Stephen Bath, joint MD of the Bournemouth- based chain of travel agents, Bath Travel, says: "It really is a form of bribery."

The 300 staff at his company's agencies are not allowed to participate in such promotions - for what Mr Bath says are good commercial reasons. "It's great in the short term, but in the long term we want customers to come back because they've had the holiday that they want, rather than what we want to sell them."

Almost every UK travel agent, though, has links with particular suppliers - airlines, tour operators, car rental companies - that earn it extra commission. Each of the four main tour operators has a chain of High Street agents through which it sells its products. (You might think you're choosing a holiday, but you're not: from the travel trade's point of view, you're buying a product.)

"If an Airtours holiday is right for you, then that's what we'll offer you," says Going Places. A similar experience awaits you at Lunn Poly (owned by Thomson), Travel Choice (part of First Choice) and Thomas Cook (which promotes its own-brand holidays, plus those of sister firm, Sunworld).

Life for travel agents these days is positively bubbling with excitement. Airtours this week launched two upmarket brochures, and is giving away a bottle of champagne to each of the agents that books one of the first 1,000 holidays sold.

A glimpse through the travel trade press reveals plenty of incentives from other companies. Gibraltar-based Cadogan Holidays has a full-page advertisement in the current Travel Weekly promising: "To you, the travel agent, we offer pounds 20 discount vouchers on every booking to be used against your own Cadogan holiday."

The hottest competition is to be found among car rental companies. If you are a travel agent and happen to need a new television, Hire for Lower can help. "After just five faxed bookings this month, we'll send You a Free Sony Colour TV", yells its advertisement. Hertz is only a little more subdued: "When you make a pre-paid Hertz car rental booking for America, we'll give you a pounds 10 voucher to spend in almost any High Street store."

A careful study of the freebies on offer can even reveal when an airline's planes are emptiest. Icelandair, for example, gives agents a pounds 10 Marks & Spencer voucher for selling a package on the daily afternoon flight to Reykjavik, but twice as much for steering customers towards the hard- to-fill evening departures.

And those are only the deals that are made public. Plenty of "over-ride" commission agreements are worked out privately between suppliers and agents. These require certain targets to be exceeded for bonuses to be earned. Sometimes agents will spilt the extra commission with the customer, in the form of reduced fares.

But often the passenger's blissfully unaware that the reason the agent was so keen to recommend a flight to Nirvana on Get You Thereways was as he or she was just one booking away from hitting the magical 15 per cent mark, applied retrospectively to earlier bookings.

The latest trend in incentivisation is for entire countries to offer cash to travel companies. Croatia subsidised holiday prices in 1997, and this winter Greece gets in on the action: "The Hellenic Tourism Organisation will offer financial support to UK tour operators looking to extend their programmes into Greece during the winter months," says Panos Argyros, the UK boss of the Greek tourist office.

Meanwhile, the old adversaries are still at it; British Airways Holidays takes a double-page spread in Travel Weekly to publicise a scratchcard promotion offering a week in Barbados. And Virgin Atlantic is promising "bigger cheque-in" by giving agents 10 per cent commission on flights, compared with the 7 per cent that is becoming prevalent among its competitors (notably BA).

"We've got to make sure we're out there," says Steve Ridgeway, of Virgin Atlantic, "and that people are looking after us - and that we're looking after them."

British Airways says it intends to appeal against its pounds 4m fine by the EC.