ASTA Finds that Non-Commissionable Fares Reduce Advisor Commission Rates by As Much as 30%

Recent research by the American Society of Travel Advisors (ASTA) and Phocuswright have determined that non-commissionable fares (NCFs) reduced advisor commission rates by 20% to 30% as compared with normal commission levels. The report also found that NCFs disproportionately impact commissions on lower-priced cabins and decrease Host agency and consortium override revenues.

Several cruise lines including Viking, Virgin Voyages, and Explora Journeys, have long eschewed the practice of NCFs. However, a recent push by Norwegian Cruise Line Holdings – first with NCL and most recently with Oceania Cruises to eliminate the controversial practice – has ASTA re-examining how detrimental NCFs truly are.

“Non-commissionable fares have a real and measurable impact on the economics of the travel advisor channel,” said Zane Kerby, ASTA president and CEO. “These findings make clear that when advisors are asked to sell and service the full value of a booking, their compensation should reflect that full value. As more suppliers move toward transparent, fully commissionable fare structures, they are not only strengthening their relationships with advisors, but they are also making a smart investment in one of the most effective distribution channels in travel.”

Lost Wages

In its recently published member brief, “The History, Economic Impact and Future of Non-Commissionable Fares (NCFs) in the Travel Industry,” ASTA broke down the actual impact of NCFs on advisor compensation.

Looking at an individual transaction of $2,000 for two passengers, ASTA identified $120 in taxes per person and an additional $100 in non-specified, non-commissionable fees per person. This reduced the commissionable base to $1,560. At a 15% commission rate, the advisor earns $234, rather than $300. In effect, this results in an 11.7% commission rate for the advisor on the entire fare.

“This illustrates how NCFs systematically reduce realized income despite unchanged ‘headline’ commission rates,” ASTA wrote.

Contemporary Brands Lead the NCF Push

ASTA also found in its research that NCFs as a tactic vary by cruise segment, with the contemporary or mass-market cruise lines tending to have the highest NCF ratios. When it announced the elimination of NCFs, Norwegian Cruise Line became the first mainstream cruise line to do so.

Premium and luxury lines tend to have a lower (or zero) NCF ratio. Viking, Virgin, and Explora Journeys, which all have no NCFs (beyond governmental fees and port taxes), all fall into this segment of the industry. So, too, does Oceania Cruises, which only recently announced it will remove NCFs starting with sailings in 2028 and beyond.

Many river cruise lines and expedition cruise lines also fall into the moderate or no NCF category.

NCFs also vary by cabin category, ASTA pointed out.

“Because many NCFs are applied as fixed per[1]passenger amounts, they represent a larger percentage of lower-priced cabin fares and a smaller share of higher-priced accommodations. As a result, effective commission rates increase with fare level: entry-level cabins may yield approximately 6 to 7%, while suites can approach or exceed 9%. This dynamic creates a structural imbalance, disproportionately reducing earnings on bookings for more price-sensitive clients and limiting advisors’ incentive to sell – and ability to profitably serve – those segments.”

In all, ASTA found that the mechanics of NCFs generally transform a nominal 10% commission into something more like 6.5% to 8.5%.

Impact on Hosts & Consortia

Moving beyond the individual advisor, NCFs hurt the broader distribution system by reducing override commissions, which are typically reinvested into the Host’s or consortium’s marketing, training, and technological investments.

“For example, on a $2,000 booking with a reduced commissionable base of $1,600, an advisor earning 10 percent commission generates $160, while a host agency and consortium earning 3 percent and 2 percent overrides receive $48 and $32, respectively. In an NCF-free model, where the full fare is commissionable, these amounts increase proportionally to $200 for the advisor, $60 for the host, and $40 for the consortium.”

This is all further compounded when cruise lines reduce pricing, but leave the NCFs exactly the same (ie, not a percentage of the fare).

NCFs Remain Relatively Undefinable

One of the many complaints that have long been raised against NCFs are their opaqueness. Simply defined as a portion of the published priced – usually for a cruise but not always – that is not commissionable, suppliers have never been willing to quantify what comprises the NCF beyond simply “taxes and fees.”

“In cruise pricing, this historically has included fees that are bundled into the fare but excluded from commission calculations,” ASTA wrote in the member brief.

According to ASTA, cruise lines generally cite things like gratuities, shore excursions, ‘certain operational cost allocations” and “other charges,” along with government port taxes and fees as comprising the NCF.

However, since the 2010s, the portion of the base fare that is considered NCF has gone up, again without any real definition or explanation.

And while suppliers insist NCFs are not a commission reduction mechanism, the fact remains that an $800 cruise fare might only end up paying commission on $400.

One Valid Argument

While ASTA has long criticized the practice of applying NCFs to supplier pricing, the Association does recognize that some taxes and fees should be non-commissionable. Port charges, government taxes, and other fees collected by the cruise lines but passed on to other entities do not represent revenue and therefore should not be commissionable.

The rest of the industry’s arguments for NCFs fall flat as far as ASTA and other travel advisor networks and trade organizations are concerned. These include using NCFs to control distribution costs and increase margins, as well as maintain pricing consistency between direct bookings and travel advisor bookings.

“They assert that eliminating NCFs entirely could distort supplier pricing strategies. Simply put, without NCFs, commissions would have to be priced into fares more visibly, which could raise prices and complicate consistent pricing across distribution channels,” ASTA wrote.

Another example ASTA provided in its brief was the use of crew gratuities to subsidize wages. While, yes, the gratuities are going straight to crew, the gratuities reduce the amount cruise lines have to pay to fulfill pay requirements, ultimately benefiting the bottom line of the cruise line.

While the cruise industry is most associated with NCFs, other industry segments have NCF-style policies that essentially reduce or eliminate commissions including air, hotel and lodging, tour operators and land packagers, and car rental companies.

The Upside of No NCFs

Conversely, suppliers that don’t use NCFs in their pricing structure are reaping several benefits, starting with a strengthened relationship between the trade and the supplier and enhance a supplier’s competitive positioning, often driving a “measurable shift in market share, as advisors demonstrate a clear willingness to direct bookings toward cruise lines that offer more transparent and equitable compensation models,” ASTA wrote.

On the advisors’ side, the elimination of NCFs has immediate and measurable implications: “Industry feedback following recent policy changes indicates that advisors may realize a 20 to 40% increase in commission per booking when NCFs are removed, again depending on itinerary and fare structure.”