The Hindu Business Line : Low-cost, no-frills airlines benefit travel agents too

WHILE travel agent commissions have dropped to 5 per cent despite the agents' efforts to stall the move, new business opportunities seem to be opening up for the community.

And the business seems to be coming in from unlikely quarters, namely the low-cost, no-frills segment.

The no-frills carriers have adopted Internet-based reservation systems to cut costs. So, while the computer-savvy customer is able to make an online reservation at the cost price, the airlines have also roped in travel agents and opened call centres and remote counters to reach out to a larger segment of travellers, who would prefer some human contact, even if it is at a slight cost to them.

`Value-carrier' Kingfisher Airlines offers agents a commission of 5 per cent (a similar rate offered by a full-service carrier). On the other hand, when a travel agent books a ticket on Air Deccan, he charges the customer a handling fee over and above the cost price and a further 5 per cent as commission. A booking made by an agent on SpiceJet earns him/her a handling fee of Rs 100.

Mr Ajay Singh, Director, Operations, SpiceJet, says, "So far, the sale of tickets has been predominantly driven by individual passengers. For the travel agent, it is a fee-based service. While we do not offer commissions, agents can make the most of volumes. Besides, the airline also offers a 1-2 per cent cash incentive to travel agents."

Air Deccan also offers an incentive scheme linked to the deposit placed with the airline, which, in turn, releases a stock of tickets to the agent.

On a deposit of Rs 50,000 to Rs 2 lakh placed with SpiceJet, the agent earns an interest of 1 per cent, which is credited to his/her account. Similarly, a deposit of Rs 2 lakh to Rs 5 lakh earns 1.5 per cent; Rs 5 lakh to Rs 10 lakh — 2 per cent; and a deposit of more than Rs 10 lakh — 2.5 per cent interest.

Agents booking Air Deccan tickets earn an additional incentive of 1 per cent on the deposit with the airline.

According to Mr John K. Kuruvilla, Chief Revenue Officer and Head — Commercial, Air Deccan, agent commissions could even rise to between 7 and 12 per cent when the airline runs promotional schemes.

Mr Lalit Sheth, Chairman and Managing Director, Raj Travels & Tours Ltd, said the arrival of low-cost carriers had helped tour operators book cheap tickets to fly clients to Mumbai, from where 90 per cent of their tours take off. However, he added, the handling fees and commission earned on booking tickets on low-cost carriers are minimal. According to another travel agent in the city, while business volumes have increased, there had not been a significant spurt in incomes.

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