KOCHI: Going by the mercurial growth that aviation sector has seen in the country, it has been forecasted India will be world’s third largest market by 2020 and the largest by 2030. But even though the sector is growing exponentially, all is not well for those who run travel agencies. Technological advancements such as mobile apps that help travelers book flights, hotel rooms and tours have put a huge dent in the business of these agencies. To make matters worse, the airline companies are planning to gradually phase out these agencies. At this juncture, when their very survival is at stake, over 300 IATA agents will meet in Kochi as a part of ICON 2017, a four-day national convention of IAAI at Cherai on Thursday. These agents, who are registered with IATA Agents Association of India, will deliberate upon the right strategy that will guarantee their survival and economic prosperity.
According to the travel agents, their businesses are have been facing turbulent times since 2008. The removal of agency commission, ticketing authority process, weekly payment system, disparity in airfares, direct marketing by the airlines, BSP charge of US$ 30 per month and impending NDC are some of the issues that challenge the very existence and survival of these ordinary travel agents. ICON 2017 is also expected to come up with meaningful long-term solutions.
Biji Eapen, national president, IAAI, said discrimination is evident from the fact that majority of the airlines have either stopped or slashed commission to the agents, despite provisions being made for it in the aviation rules. “For instance, revenue for airline companies comes in through the sale of passenger and cargo space. But the agents only get commission for the sale of cargo space,” he said. Agents earn five percent commission for cargo.Problems began for the travel agents first in 2004 and escalated towards the end of 2008 when Air India implemented the ‘zero commission’ (within India) to please its grand masters – the Star Alliance Group. In June 2012, Air India slashed the commission it gave to its agents from three to one percent. It directed the accredited travel agents to compensate the losses by collecting transaction fees from the passengers, which the agents say is not possible at present.
Of around 92 airlines which operate flights to and from the country, a majority have either stopped or slashed the agents’ commission.In the new GST regime, the ticket tariff and service charges or transaction fees are totally distinct components. They have to be invoiced or billed separately. Even incentives under the up-front deductions do not fall under the ticketed tariff. In the Indian scenario, customers show reluctance to pay service fees other than the ticketed fare. Hence, only airline ‘commission’ can remunerate the accredited travel agents and save them from doom, the agents say.
Countries mandate commission
Israel - Court directed Lufthansa, British Airways and others to pay 7% commission
Bangladesh - Ministry of Civil Aviation- mandated 7% commission
Yemen –Ministry of Civil Aviation- mandated 7% commission
Japan - with Govt support, JAL is maintaining 9% commission in japan.
Gulf Countries- through Amery Decree, 7% commission mandated on all tickets.
Countries like Australia, Hong Kong and New Zealand
British High Court order against Pakistan Airlines for payment of commission
Air India and Jet airways pays 1% on basic fares (excluding fuel charges) to which service tax also applies
Foreign carriers like Lufthansa, Singapore Airlines, British Airways, American Airlines, Japan Airlines, Qatar Airways and Turkish Airlines almost 25 airlines not paying any commission in India
These carriers including Air India and Jet paying commissions in most other countries
By depriving commission, these airlines are flouting the national law and forcing travel agents to charge their customers over the ticketed amount
The Supreme Court has prohibited charging any amount over-ticketed fares and DGCA has directed airlines not to charge customers additionally. It has warned the public to ensure not to pay any money over the actual ticketed amount printed by the airline, which means, as per statutory law, ticketed amounts must be conclusive and final to avoid any oligopolistic process
Breaking the back
Rubbing salt into an already smarting wound, the International Air Transport Association (IATA) has introduced an annual accreditation fee from January 2017. Agents have to pay a total of Rs 48,139 per annum to IATA if they want to use their link to get the ‘Zero’ commission airlines tickets from this year. Strangely, the sales proceeds of the tickets for air travel, which is approximately $16 billion dollars per week, is being routed through Deutsche bank instead of nationalised banks.
Besides, the decision to introduce weekly payment system, under which the agents have to remit their billing amount within seven days for both international and domestic tickets, made matters worse for them. Since corporate bookings need capital and credit the decision has adversely affected the agents who are now left scraping the bottom to meet various expenses. A lot of small and medium businesses have downed their shutters over the past ten years.
Theme of the meet
The theme of ICON 2017 is ‘travel agents by 2030 - protocol redefined’. IAAI is ready to wage a lone battle in the legal forums for the legitimate rights of small and medium sized agents in the country. The convention is also expected to chart out ways and measures to be taken in the changing scenario in the skies over the country.