Companies

Travel firms shift focus from ticketing to packaged tours

Nivedita Ganguly Anjana Chandramouly Mumbai/Bangalore | Updated on March 12, 2018

Tourists in Kashmir: Travel Web sites are focussing on selling holidays as earnings get squeezed on ticket sales.

Companies look at alternative business models as commissions fall



Turbulent times in the aviation sector have forced travel agents and portals to focus on packaged tours. Besides, domestic carriers are also pushing for a reduced commission regime which makes the ticketing business unviable for these agents and portals.

For instance, Yatra.com's marketing strategy over the past two years has gradually shifted to packaged tours. Currently, packaged tours form nearly 30 per cent of its business. “The commission on airline tickets has always been low. So our strategy right now is to be known in the travel space and offer package travel deals,” said Mr Pratik Mazumdar, Head – Marketing and Stategic Alliance, Yatra.com. In an effort to strengthen its presence in this segment, the travel portal had introduced group tours to new destinations such as Eastern Europe and US this year.

Traditionally, airlines paid 9 per cent commission to agents, as they were the sole distributors for air tickets. However, over a period of time with the availability of multiple distribution channels, the commission was reduced to 5 per cent.

Commissions for holiday packages are at 10-30 per cent and with domestic tourism picking up, travel agents and portals feel there is good business opportunity there.

“For agents to survive, they have to look at other business models. Currently, hotels and holidays form 10 per cent of business for agents and portals,” said Mr Sanjay Bhasin, President Goibibo.com.

He, however, feels that given the low load factor for most airlines, a reduced commission will bring down travel agents' interest in selling air tickets. This will end up bringing down business volumes further.

The Travel Agents Association of India (TAAI) has set up an arm – Indian Travel Trade Expo, which is a networking platform for promoting tourism and providing multiple ways to make their business sustainable and viable. “We are advising agents to look at alternative business model,” said Mr Iqbal Mulla, President, TAAI.

Published on May 07, 2012

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