Air Canada cuts travel agent commissions in bid to lower costs

Air Canada says fuel shortages are not affecting their operations, saying there will be ‘no significant impact’ through this summer. Kamil Karamali explains.

MONTREAL — Under pressure from high fuel prices, Air Canada told travel agents this month it will reduce their commissions in a cost-cutting move that could hurt the income of thousands of industry workers.

The country’s biggest carrier informed the Association of Canadian Travel Agencies and Travel Advisors the lower rates will take effect July 1.

“While the impact will vary by business, some members have indicated that the changes could have serious implications for the long-term viability of their agencies, particularly where Air Canada represents a substantial portion of their sales,” said association president Suzanne Acton-Gervais in an email.

The group’s thousands of members could see a loss of about a quarter of Air Canada-related revenue as a result, she said. Canada plays host to nearly 27,000 travel agents, according to the association.

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In the commission system, an agent gets a cut from airlines or other vacation providers when selling tickets to passengers on their behalf. Some agencies also charge service fees to customers.

Arrangements with airlines vary by agency, but commissions often hover between eight and 10 per cent of the base cost of a booking.

Brenda Slater, co-founder of the Association of Canadian Independent Travel Advisors, said many of her counterparts have seen Air Canada commissions cut in half to about four or five per cent, and sometimes lower.

“For them to basically say, well, now we’re only going to give you three per cent is a little bit of a smack,” Slater said in a phone interview.

The airline’s move comes after it trimmed its flight schedule and suspended its financial forecast for the year amid a prolonged spike in jet fuel prices caused by the Iran war and the closure of the Strait of Hormuz, a key choke point for about a fifth of the world’s oil supply.

Air Canada has said it will recoup just 50 to 60 per cent of the higher energy costs in its second quarter.

Aviation fuel makes up only part of the picture. Higher costs overall, rising market uncertainty and the advent of artificial intelligence, “which promises to reshape the whole travel ecosystem,” pushed Air Canada to change its commission plan, the Montreal-based company said Tuesday.

“We are under high-cost pressures. Adapting to these changes requires that we manage our costs accordingly,” said spokesperson Peter Fitzpatrick in an email.

“Our cost of sales through agencies is growing faster than our revenue gain, which is not sustainable.”

Fitzpatrick said the airline could not speculate on whether commission rates might rise as fuel prices come back down.

However, Slater warned of potential unexpected consequences for Air Canada.

“They need to be aware that travel advisers are watching and very careful to pick the suppliers based on who’s going to service our clients the best -- and who also is going to support us the best,” she said.

“If they’re not going to do that, that’s their choice. But we also have choices.”

Even amid ongoing uncertainty over safe passage through the Persian Gulf, spot rates for aviation fuel have started to decrease, with a framework agreement in place between the United States and Iran.

The average price of jet fuel in North America dropped 23 per cent last week versus a month earlier, according to the International Air Transport Association. Though they remain nearly a third higher than a year ago.

Porter Airlines announced it would halve its fuel surcharge on new bookings “as the fuel market has started to normalize.”

The Toronto-based carrier reduced the charge to $20 from $40 on new reward flight bookings starting Tuesday, it told VIPorter members in an email.

Meanwhile, Acton-Gervais noted that the burden of lower commissions could fall disproportionately on certain demographics.

“Travel agencies and travel advisers are overwhelmingly small- and medium-sized businesses,” she said. “The majority of travel advisers are women.”

She and Slater sought to stress the value that professionals offer passengers in a world replete with travel disruptions, pointing to risk management and sheer accessibility compared with hard-to-reach customer service representatives at some carriers.

“Now, people are questioning these industry partnerships,” Slater said of her colleagues.

“We’re constantly being told that we’re an important partner to them, but it doesn’t seem that way.”

This report by The Canadian Press was first published June 23, 2026.

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