Many travel agents in India likely to shut shop

New Delhi: Many travel agents in India, whose revenues come from the commission on selling air tickets, may soon be forced to make an exit from their business. If industry estimates are be to believed, about 80% of the total travel agents in the country will be left with no options but to call it quits once the airlines stop paying any commissions to booking agents from October 1, 2008.
Airlines have already reduced travel agents’ commissions from 10% to 5% as the airline industry was severely hit by increased ATF prices and overall slowdown of the economy. However, the transition to a zero commission regime will not be very smooth considering that 90% of the airline booking business is still handled by travel agents.
At present, there are about 2,860 International Air Transport Association (IATA) affiliated agents in India and roughly around 40,000 sub IATA agents who purchase tickets from IATA affiliated agents. Once this move comes into force, as many as 35,000 agents and sub-agents will be forced to shut shop.
One of the options that many of the travel agents are looking at is to transform their business model into that of a travel portal. E-commerce, in fact, is the only travel segment, which is notching up good profits despite the slowdown.
“Small travel agents are definitely going to close down their operations when airlines stop paying commissions to travel agents. I feel this move will compel over 80% of the travel agents to leave their business,” says George Kutty, chairman, northern region, Travel Agents Federation of India (TAFI).
10/08/08 Mohammad Faizan Khan/Economic Times

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Aug 2008