Travel agents in a fix as airlines remove transaction fee
27 Nov 2008
Mumbai: Travel agents and online travel portals are expected to post lower revenues with airlines deciding to scrap transaction fees. The online travel booking portals had earlier benefited by the decision by leading airlines to discontinue with the practice of offering up to 5 per cent commission to travel agents on each air ticket sold. Now the airline firms have done away with the transaction fee on tickets that protected the interests of the agents.
Ticket sales of Yatra Online Pvt Ltd, MakeMyTrip (India) Pvt Ltd and Arzoo.com have risen 10-20 per cent since 1 November, the day National Avaition Co. of India Ltd, or Nacil, Jet Airways (India) Ltd and Kingfisher Airlines Ltd did away with the travel agent commissions.
However, to compensate for this, they allowed travel agents to impose a transaction fee ranging from Rs350 on a domestic route to up to Rs10,000 on an international ticket.
Air travellers began buying tickets through travel portals because they perceived these purchases to be cheaper and transparent.
However, on Tuesday, Nacil, which runs Air-India, and Jet Airways removed the transaction fee levied on tickets purchased on their websites, making tickets bought online on their sites cheaper. Travel agents also find it difficult to continue charging transaction fees.
Almost 15 per cent of tickets bought in India are bought online, with the remaining transacted through offline ticket agents.
The Travel Agents Federation of India and Travel Agents Association of India plan to meet airline executives on Friday to discuss the issue of commissions and transaction fees.
Industry sources said airlines may suffer in the short term, losing their bulk bookings from agents.
Air-India and Kingfisher have stopped charging transaction fees on air-ticket bookings from Tuesday midnight. The move has lowered the fares by Rs350 to Rs10,000 per ticket from Wednesday.
Air travel associations say they will boycott Kingfisher Airlines from 1 December for this reason.
The 2,000-strong Travel Agents Association of India (TAAI) is also weighing the possibility of going to court to get the commission structure restored.
Lawyers say the agents do not stand much of a chance as any company is free to practice trade without paying anything to middle men.
A Kingfisher Airlines official said there will be no problem selling tickets without the help of agents as in more than 21 countries airlines operate with a zero commission structure.
A spokesperson for the airline said there is no transaction fee on tickets purchased directly through the airlines' city ticketing offices, web site and call centres from Wednesday (26 November). The airline says it will reimburse the amount of agreed transaction fee to those travel trade partners who entered into agreements with the airline and levied a transaction fee on the ticket(s) they sold.
