Passengers spared travel agents cut

Written by Shaheen Mansuri | Shweta Bhanot | Mumbai | Updated: Mar 13 2010, 07:45am hrs
Travel agents on Friday claimed victory in a dispute with 16 foreign airlines that fly in India over the pricing of air tickets. The agents said the regulatory bodydirectorate general civil aviation (DGCA)has directed airlines to restore commissions on tickets issued by the travel agents instead of making the agents charge a transaction fee on the passengers.

But by evening DGCA clarified it has not asked the airlines to pay any commission. The order issued by its chief, Nasim Zaidi, stated, As per rules the DGCA cannot lay down quantum of commission payable by airlines to agents.

In other words while no fees can be charged on passengers by the agents as part of air tariff, market forces will determine if an airline should offer any commission at all to agents.

It is entirely up to the airlines to take a decision in this regard in consultation with agents, taking into account various commercial factors, it said. The order caps more than a years dispute with foreign airlines, over zero commission for air tickets, waged by the travel agent fraternity.

Last year, the new system adopted by most airlines replaced commissions by transaction fees. The agents opposed it saying it would create discrepancy as there could be no uniform fee charged by the agents.

Airlines based in India soon reverted to the commission system.

However, foreign airlines, including Singapore Airlines, Lufthansa, Delta, KLM, Qatar and British Airways, stuck to the new system. While a senior executive with an international airline said, We have received the directive from DGCA and are in the process of reviewing it, Rajinder Rai, president of Travel Agents Association of India, said, after this directive, the association will be discussing with foreign airlines about the commission structure. He said the airlines have not approached the association on the issue.

Over the years, the commission rates paid by airlines have been progressively whittled down from 9% a couple of years ago to 7% and finally to 5%, before eliminating them altogether in 2008. Agents had also toned down their demand from 5% earlier to 3%. The domestic airlines like Jet Airways, Air India and Kingfisher Airlines, which too went for the zero commission system for a short duration, have already moved back to a 3% commission structure.