Understanding NCFs
The American Society of Travel Agents (ASTA), in an effort to help agency members understand the role Non-Commissionable Fares (NCFs) play in cruise sales and revenues, has published a white paper on the history and current state of NCFs.
“We know many of our leisure-focused agencies have great concerns about NCFs,” said ASTA president Zane Kerby. “Clearly, travel agents should be fairly compensated for creating demand for the cruise lines. At the same time, those companies have the right to price their product as they see fit. That’s why ASTA recommends that each agency take a close look at their revenue data to determine the right product mix and business model for them.”
ASTA conducted a series of interviews with agency members and cruise line executives to produce this document. The process included reviewing historical records on NCFs, including fare lawsuits in the late 1990’s that precipitated the change in how NCFs are presented. A large selection of cruise line invoices also were analyzed to look for patterns in how NCFs are applied to specific types of cruises. The paper describes changes travel agents are making to mitigate revenue losses, and also reviews average NCF/gross fare ratios.
“Ultimately, ASTA urges those agencies heavily dependent on selling cruise to take a few hours and look at their revenue data and make their own determination of whether the NCF is reasonable and if profitability is sustainable,” said Kerby, and if not, adjustments in product mix or agency business model should be considered.
ASTA has tools available to members for reviewing their agency business model and improving their sales skills for upselling, including Assistance for Sales & Marketing and Assistance for Reviewing Your Business Model.
Members can access the white paper for free. Non-members may purchase the paper for $49.
