Mumbai: With full-fare domestic airlines deciding to scrap agent commissions, travel agents are getting ready to fight back, and plan to label such carriers as “least preferred”, where they will book tickets only if another option is not available.
State-owned National Aviation Co. of India Ltd or Nacil, Jet Airways India Ltd and Kingfisher Airlines Ltd have decided to scrap from 1 October the 5% commission on basic fares, which is before taxes and surcharges, that they pay to travel agents as part of efforts to cut costs. That will dry up the widest revenue stream for agents—about 90% of their business is from airline bookings, mostly for corporate clients.
“There is nothing to prevent our members from deciding to accord ‘least preferred airline’ status to any carrier,” said Ajay Prakash, national general secretary of Travel Agents’ Federation of India (Tafi). “If any airline thinks the only way to survive is to eliminate its agent network, they should wait and see what will happen to them when agents decide to withdraw their support.”
Self service: A file photo of airline counters in New Delhi. Travel agents plan to charge Rs100 per passenger for domestic travel and Rs500 for international tickets from October. (Photo: Madhu Kapparath/Mint)
C.V. Prasad, president of the Travel Agents’ Association of India (Taai), said on Friday that he is in a “crucial meeting” to decide on a strategy to combat the scrapping of the commission. He could not be reached on phone later.
Tafi and Taai, which together represent about one million employees working with travel agencies, are exploring legal options and discussing ways to tide over the situation.
Executives at the airlines could not be reached for comment over the weekend.
Airline companies in India, facing a combined $2 billion (Rs8,580 crore) loss this fiscal because of high fuel costs and fierce competition, are resorting to steps including cutting down on flights, and have already cut the commission to travel agents from 9% earlier.
International airlines traditionally take cues from Nacil, which operates Air India, for their India operations and are planning a similar move, according to officials in the airline industry. Smaller airlines depend mostly on online bookings and do not pay commissions to travel agents.
To compensate part of the losses, some travel agents are planning to impose a service charge on the bookings they make. But that will make their services more costly as bookings through airline websites, where there is no service charge, will be cheaper.
Travel agents plan to charge Rs100 per passenger for domestic travel and Rs500 for international tickets from October, said R. Ramanunni, who owns travel agency Pushpak Tours and Travels in Mumbai.
About 85% of airline bookings in India are done through travel agents, including online agencies such as MakeMyTrip India Pvt. Ltd and Cleartrip Travel Services Pvt. Ltd. Rest is booked directly by passengers.
“Online travel agents will feel the heat when customers opt directly for websites of airlines,” said Ashwin Damera, founder and chief executive of online travel agency Travelguru.com. “Many online travel agents will start adding service fee on each booking to cover their costs,” he added.
Regi Philip, who runs Cosmos Agencies in Mumbai, added, “Most clients will now desert travel agents and will go online for booking tickets.”
Priti Jain, an assistant officer at Ispat Industries Ltd, said she would prefer booking her personal tickets online. “But, for business travel, I will still have to depend on travel agents.”
“The concept of permitting the travel agents to levy a transaction fee directly from the consumer will replace the payment of commission from 1 October,” Kingfisher Airlines had said in a recent circular.
D. Kishore, commercial manager for western India at Nacil, in his circular to travel agents, said airlines are struggling to survive, and modalities of implementing a transaction fee instead of commissions are being worked out.