Agents say they will insist on 5% cut from airlines

Threaten to stop selling tickets unless carriers agree to demand

MUMBAI: Travel agents, who are at loggerheads with airlines over the issue of commissions, say they will settle at nothing less than the restoration of the 5% commission regime. They are scheduled to meet airlines officials in Delhi with this demand on July 24. The agents added that they will ‘resort to confrontation’, including stopping selling tickets, if their demands are not met.

According to the current system, airlines pay 5% of the base fare as commission to the agents.  Nearly 85% of all the tickets with a total value of around Rs 33,000 crore are is sold through agents in India.

Marzban Antia, managing director, Avesta Travels and Tours,  and an official with the Travel Agents Federation of India (TAFI), said, “We will only accept a formula which is viable for us and also for the airlines. We are not going to allow airlines to undercut us. If the meeting doesn’t help, we will be forced to resort to confrontation.” He was speaking at a meeting intended as a show of unity by various associations of travel agents in Mumbai.

Airline executives, however, suggested that they have little option other than continuing with their stand on the commission issue, especially since it was part of their cost-cutting drive.

A private airline executive added on condition of anonymity that the threat to not sell tickets would be counter-productive for the travel agents themselves.

The travel agent community has been up in arms ever since airlines, led by national carrier Air India, announced that from October they will stop paying the 5% commission to agents. In most mature global markets, airlines do not pay commissions to agents. The margin for the agents comes from the service charge, which they levy directly on customers.

Zakir Ahmed, a past president of TAFI, said, “We will have to go back and tell the airlines that our country is not ready for the zero-commission regime that has been implemented in the US.”

Travel agents say the US is a mature market where 98% of transactions are through a credit card, unlike in India where this is less than 9%.

While the official version seems to be one demanding restoration of the 5% commission, it is not clear if all the agents agree to this posturing. Some agents DNA Money spoke to said that even a delayed implementation of the zero commission regime could be an acceptable solution.

n_john@dnaindia.net