Various travel trade associations (TAAI, TAFI, IAAI, IATO, ADTOI and ETAA) meet to initiate dialogue with airlines.
Post a joint meeting of travel agents’ associations in Mumbai in April, IATA Agents Association of India (IAAI) has written to airlines to reinstate agency commission at 5% level on gross after the DGCA issued an order on March 5, 2010.
According to the directive by the Directorate General of Civil Aviation (DGCA): “The statutory position under the rule 135 requires airlines to determine tariff in accordance with law, including commission payable to agents. The existing law also requires airlines to display total fare and its components.”
“We are the cheapest outsourcing option but the airlines want us for free,” said Pradeep Lulla, president, The Travel Agents Federation of India (TAFI). Foreign airlines sell 85% of their tickets through agents.
International airlines operating in India which had gone over to zero commission from November 2008 include KLM Royal Dutch Airlines, North West Airlines, Air France, Qatar Airways, Singapore Airlines, Silk Air, Lufthansa, Air Canada, Continental Airlines and Japan Airlines. Austrian Airlines joined the group in January 2009 and Delta Airlines and British
Airways joined in April 2009.
Agent representatives said that under the zero commission system, a few big travel agents were dominating the market and charging consumers exorbitant amounts as transaction fees.
Biji Eapen, National President, IAAI, said, “We sell 85% of the tickets. You cannot compare India to any other place.
Airlines do not have representatives in remote rural areas. Agents are their real promoters.”
The transaction fee ranged from Rs 750 to Rs7,000, depending on the class. The civil aviation regulator said the system had been “detrimental to consumer interests in more than one way”.
The directive ruled out zero commission in India. DGCA has directed all the airlines that had gone to zero commission that they must reconsider this decision, and in consultation with agents decide on a commission that has to be paid to them.
On April 15, the Indian Minister for Civil Aviation, Praful Patel clarified in the Lok Sabha that the DGCA cannot indicate a quantum of commission. The DGCA then passed another order indicating that it is entirely up to the airlines to take a decision in consultation with agents, after taking in to account various commercial factors such as the market conditions, the cost of agents’ establishments and statutory definition of ‘tariff’.
Various associations of agents were involved in the campaign. IAAI had filed a Contempt of Court Case on February 8, 2010 against Ministry of Civil Aviation (MoCA), DGCA and 16 zero commission airlines.
The Kerala High Court issued a notice to DGCA seeking reasons for failing to enforce the National Law concerning commission for travel agents.
“Travel Agency commission at 9% was in force throughout the world, which was reduced in 2005 to 5% on mutual agreement in India. Later in 2008, commission was reduced to zero and instead airlines suggested that agents collect ‘transaction fee’ from passengers,” said Eapen.
Rajji Rai, President of Travel Agents Association of India (TAAI), said: “The zero commission system has proven to be
detrimental to the consumer interest as the fare is loaded with a transaction fee, which sometimes may be exorbitant as charged by unscrupulous agents. There are also some big agents who are paid hefty amounts by the airlines in the name of productivity.”
The agents and airlines need to meet to decide the commission amount. While the agencies have initiated contact, the airlines have not shown any keenness on responding.
The Association of Domestic Tour Operators of India (ADTOI) and Association of Tour Operators (IATO) all met to decide future course of action.
“We will have to hold dialogue with each airline separately and there are high chances that each airline may suggest a different commission structure,” Rai said. Airlines such as British Aitways say that the order does not mandate that commission is payable, only that the tariff should include it, if it is payable.