MONTREAL — 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 told 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.

Commissions are the cut that agents receive from an airline or vacation provider when selling tickets to passengers on their behalf. Some agencies also charge service fees to clients.

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 three to 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.

Air Canada could face unexpected consequences as well, she warned.

“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.”

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.

Air Canada has said it will only recoup 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 it to change its commission plan, the Montreal-based company said Monday.

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