Is the equation between travel agents and airlines changing?

While the airlines continue to call travel agents an integral part of their business, the agents are increasingly feeling they are not getting their due. Not just in India but in other parts of the world too, the distance between airlines and travel agents is increasing. The row between Indian travel agents and Singapore Airlines has only intensified with travel associations claiming 1,000 agents have stopped selling SIA tickets and have surrendered their capping letters. A capping letter is a document given by the airlines authorising the agent to book the respective airline’s ticket.
For some time now, agents and airlines have been at loggerheads over a series of issues, such as diminishing commissions, zero commissions, difference in pricing of tickets sold by agents and those sold on the airline’s Websites, and so on.
While the airlines claim that all these are cost-cutting measures to tide over the difficult economic situation of eroding toplines and bottomlines, the agents don’t agree. They say just cutting their commissions is not going to improve airlines’ finances.
In India, it all started last year, when the domestic carriers and some international airlines decided to implement a ‘zero commission’ system from October 1, and then deferred it to November 1. The airlines asked the agents to charge the customer directly for the services offered and put a ‘transaction fee’ system in place which would replace their commissions. However, the agents contested the issue saying the Indian consumer was not ready for this change.
According to agents, transaction fee system was not free from discrepancies. This new system restricted the cash flow for the agents because the entire payment is to be lodged with the airlines and a credit note would be issued by the latter after the billing cycle is complete.
After a lot of dialogue and resistance from the travel agents, including a one-day boycott of airline ticket sales, the domestic airlines — Jet Airways, Air India and Kingfisher Airlines — agreed to travel agents’ demands and decided to pay three per cent commission on the gross fare (base fare plus fuel surcharge excluding passenger fee) against the earlier practice of paying five per cent commission only on the basic fare. However, about 13 international carriers continue with the transaction fee system and have not reinstated the commissions. These include Qatar Airways, Emirates, Eithad, British Airways, Cathay Pacific, Singapore Airlines, Finnair.
13/04/09 Shubhra Tandon/Business Line

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Categories: Indian Aviation- In General Apr 2009