WEBJET: Travel agent squeezed as Virgin Australia cuts commissions

Webjet is warning investors that trading conditions remain “fluid and challenging” after Virgin Australia cut the commissions it pays the online travel agent, according to an article in the SMH.

For travellers, that could mean fewer sharp Webjet airfare deals on Virgin flights. For Webjet, it is another revenue hit at a time when Australians are already baulking at high airfares, amid rising household cost pressures.

Virgin wants you direct

Virgin remains a “valuable partner”, according to Webjet chief executive Katrina Barry. Barry told investors that, had Virgin’s lower commissions applied during the 2026 financial year, Webjet would have lost around $3 million in revenue.

Webjet reported underlying pre-tax earnings of $28.1 million for the year to 31 March 2026, down from $35 million the previous year. Total transaction value slipped from $1.5 billion to $1.46 billion. Revenue in Webjet’s core online travel agency business was flat at $115.3 million.

Travellers are still flying, but closer to home

The usual suspects are to blame: a difficult mix of elevated airfares, low consumer confidence, inflation pressure, the Iran war and the related oil price shock.

Domestic flight bookings through Webjet fell 10%. International bookings rose just 1%, with growth skewed towards shorter-haul destinations in Asia and the Pacific.

Australian travellers are still travelling, but choosing Bali, Fiji, Thailand or New Zealand over pricier long-haul trips to Europe or North America.

The OTA squeeze

Webjet helped pioneer online travel booking in Australia. But the model is under pressure.

Airlines increasingly want direct bookings through their own websites and apps, where they can sell bags, seats, insurance, hotels, cars and loyalty add-ons. Qantas has been doing this for years. Virgin Australia wants more of that pie.

For online travel agents, lower commissions eat into margins.

Increasingly, travellers are using Webjet, Google Flights, Skyscanner or similar tools to scan the market, then checking the airline’s own website before purchase. Travellers are also learning that booking directly with the airline can make cancellations, delays, and schedule changes easier to manage.

2PAXfly Takeout

It may be that the days of online travel agents are waning. Customers have heeded the do-it-yourself format used in everything from banks and supermarkets to travel.

Commission cuts have been progressive for years, to the point that smaller travel agents now charge a fee instead of having their costs covered by the airline.

It may be that these bulk online booking engines are past their prime, with the market now favouring more bespoke travel agents that have a human face and touch points.