Mumbai/Bangalore: India’s largest airline by passengers carried Jet Airways (India) Ltd and state-owned Air India Ltd have decided to lower commisions to travel agents to 1% from 3% on the basic ticket fare and fuel surcharge starting 16 July.
This is a prelude to Indian carriers abolishing commissions fully as part of a cost-cutting drive.
Agents were told of Jet’s decision in a letter from Sonu Kripalani, vice president, passenger sales, India, on Wednesday. The revised commission will apply to both domestic and international travel.
The Travel Agents Association of India (Taai) opposed the move.
Taai asked Air India to defer the reduction to 31 October to ensure “full support from travel agents in India” as the carrier struggles with heavy debt and a strike by a section of pilots that has disrupted flights.
Emirates Airline is also joining the bandwagon by reducing its travel agency commission to 3% effective from 1 July, 2012, against current 3%.
“As a result of an extensive market screening, which involved our trade partner, Emirates has decided to align itself with the current market practice of revising IATA (International Air Transport Association) commission to 3% with effect from 1 July, 2012. All tickets issued prior to 1 July will continue to attract the IATA commission of 5%,” Orhan Abbas, vice president, India and Nepal, at Emirates Airline, wrote in a letter to travel agents.
In late 2008, many airlines, including Singapore Airlines, British Airways and Lufthansa German Airlines, switched to a zero-commission regime (they had been paying 5%) and asked travel agents to charge a transaction fee from passengers buying tickets from them. In retaliation, many travel agents boycotted zero-commission airlines.
Subsequently, Air India Ltd, Kingfisher Airlines Ltd and Jet Airways (India) Ltd restored the commission, albeit at a lower 3%.
The move to cut the commissions further had been taken up by the Indian airline lobby group Federation of Indian Airlines (FIA), which in January warned travel agents against boycotting any airline seeking to remove or reduce the commission.
“We wish to advise you that you should not adopt an adversarial position or take any adverse action (whether individually or in collusion with other agencies) against such measures taken by one or more of the member airlines of this federation or attempt yourself or through any agency to isolate and target individual member airlines, since such an act will constitute violation of the extant competition laws of the country,” Ujjwal Dey, an executive officer at FIA, wrote at the time.