In what appears to be a clear victory for thousands of travel agents in the country, the aviation sector regulator Directorate General of Civil Aviation (DGCA) has asked KLM Dutch Royal Airlines to pay commission to the agents.
Over a dozen foreign airlines including British Airways, Lufthansa and Singapore Airlines had in 2008 decided to stop paying fixed commission to agents and introduced a transaction-fee based model. While the fixed-commission regime requires airlines to pay a certain part of the ticket price as commission to agents, travel agents collect a fee ranging from Rs 250 to Rs 3,000 from passengers for booking the ticket. Over 85% airline tickets are currently sold through travel agents.
?The DGCA has written to KLM asking to pay commission to agents or face action under the Aircraft Rules. The regulator has given 15 days to the airline to revert on the issue,? travel industry sources said. Objecting to airline?s decision to follow zero-commission regime, nearly 2,400 travel agents under the banner of Travel Agents Association of India (TAAI), Travel Agents Federation of India (TAFI) and IATA Agents Association of India (IAAI) had moved court. The agents filed petitions in Kerala and Karnataka High Courts.
Later, the Kerala High Court asked the DGCA to examine the issue and see if the airlines? decision was in accordance with the law. Following this a DGCA directive upheld travel agents? demand to reinstate commission but it did not quantify the amount leaving it to negotiation between the two parties. So far most of the airlines interpret the regulatory directive to their own interests.
?Our understanding of the conclusion reached by DGCA is that the applicable rule does not mandate airlines to pay a commission to agents. It only stipulates that the tariff shall include the commission to agents if commission is payable,? BA regional commercial manager (South Asia) Judy Jarvis had in April written to DGCA.
Some carriers have maintained that paying commission to agents is a commercial issue and hence the regulator should let the issue be resolved by the two parties. While foreign carriers argue that zero-commission model is followed worldwide the agents contend it saying airlines pay fixed commission in many markets including Australia and Japan.
?Despite our repeated requests after the DGCA order foreign airlines have refused to reinstate commission. We have complained to the regulator very categorically,? TAAI president Rajji Rai said.