The Hindu Business Line : Zero commission: Airlines to take a call on Aug 1

Mumbai, July 24 Airlines have sought time from travel agents till August 1 to decide on whether they will implement the ‘zero commission’ from October 1, 2008, as earlier said.

In a meeting held in New Delhi on Thursday, the representatives of the five travel agents’ associations made a presentation to the airlines and put forth their concerns regarding zero commission.

“We have asked for a deferment of the date for implementation of the zero commission to which airlines responded positively. Secondly, we have also said that whatever is applicable globally need not be suitable for the Indian environment and therefore we need time to prepare the industry, if at all a zero commission scenario needs to come to the country,” Ms Shubhada Joshi, Secretary General of Travel Agents Association of India, told Business Line.

Currently, the airlines give five per cent commission on the basic fare to the travel agents. Over the years the commission has reduced from nine per cent to these levels and now the airlines want to take it down to zero.

The bleeding aviation sector argues that this is part of its cost cutting measures given the high price of aviation turbine fuel. However, the agents disagree with this argument and believe that just cutting their commissions is not going to improve airlines’ financial health.

Meanwhile, according to the agents, the airlines have suggested to them to start charging a service tax or fee directly from the customer to offset the impact of zero commission, as is done in some other nations.

“This cannot be done with a snap of a finger,” said Ms Joshi. “We need to create an environment for this not just within the travel agents’ community but also the Indian customer, which requires lot of work. A whole new billing system needs to be put in place; training of staff, etc,” she added.

One of the demands prior to implementation of such a step also includes uniform policy and transparency across all mediums of booking (offline agents, airlines’ websites and booking offices) so that the customer is not misled by difference in prices, she said.

The meeting was held between representatives of TAAI, TAFI, IATO, AITO and Kingfisher, Jet Airways, Air India, Malaysian Airlines, Mauritius Airlines etc. Members from other associations were not reachable for comment.