The Hindu Business Line : Reduction in commission — Travel agents threaten to take action against airlines

TRAVEL agents across the country have threatened action against airlines if they go ahead with reduction in commission from 7 per cent to 5 per cent from April and later do away with the commission itself.

A top official of the Travel Agents Federation of India (TAFI) told Business Line that they will be forced to take appropriate action against airlines if they go ahead with their plans on lowering their commission from the current level. However, they are willing to discuss the issue with airlines to resolve the impending crisis. In case the airlines stick to their stand even after the talks, the agents will have no option but to consider legal action.

Last week, Air India, supported by other airlines, is understood to have decided to go ahead with the reduction in commission. A few months ago, when a few European and American airlines led by Lufthansa decided to reduce the commission from 7 per cent to 5 per cent, the airline had to face a boycott of all travel agents, forcing it to withdraw its move.

The TAFI official pointed out that for several years, agents used to earn 9 per cent but agreed to a reduction to 7 per cent after 9/11 with the understanding that the airlines would restore it to its earlier level once the situation normalises. In case the agents accept the airlines' move, even a two per cent reduction would mean 30 per cent decrease in total revenues and if the commission is done away with completely, the agents will be forced to close shop.

The airlines now want to reduce the commission further, terming the same a burden on their "distribution costs'' while the agents claim that it should be deemed "cost of sale", since commission paid is a form of remuneration for services rendered to the customer by the agent on behalf of the airline. However, travel agents believe that the Indian market is not ready for service fee concept because of the socio-economic conditions prevalent in the country.

The TAFI official said it is mandatory on the part of airlines to give commissions as they outsource sale of tickets to travel agents, reducing their work-load. He said travel agents generate over 80 per cent of the business for airlines.

But airline representatives say that travel agents provide some services directly to the customer, such as planning an itinerary or choosing an airline, so the customer should pay for the work done, a practice prevalent in the US and some European countries.

Disputing this, agents contend that it is not fair to ask the customer to pay up for the work carried out by them as a distributor of the airlines.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Jet Airways IPO subscribed 10 times

Reduction in commission — Travel agents threaten to take action against airlines

Northwest Airlines plans to connect Bangalore

Kandla Port handles record volume of wheat cargo

`Deepen port channels to attract mainline vessels'

Concor Coimbatore ICD venue is Customs notified

Rlys working out ways to increase freight volumes

Rlys raises wagon registration fees

Partnership pact signed to develop Chennai IT corridor