Air travel in India is set to become costlier. With most airlines announcing the abolition of 5 per cent commission paid to travel agents, passengers now may have to pay a transaction fee between 2-5 per cent to their agents.
While Air India took the lead in following the zero-commission structure, to be implemented from October 1, Jet Airways, JetLite and Kingfisher have followed suit. While most travel agents used to provide discounts to their bulk buyers from the commission, now they are planning to introduce a transaction fee if talks with airlines fail. All the travel agencies are going to meet on July 2 to decide on the future course of action, said Praveen Chugh, president of Travel Agents Federation of India.
“Since most of our business comes from regular travelers and corporates, they would not shift to travel portals and would have to pay more for the services we have been providing for free till now,” said Ashutosh Sharma, owner of Sadhana Travel Services in Nehru Place. “While big agents would be able to survive this blow, many small agents would be wiped out and huge number of people would get unemployed,” he said.
There are 2,850 travel agents in India affiliated to the International Air Transport Association (IATA) and more than 10,000 small sub-agents. “This move came all of a sudden. While the airlines would not save much, lives of lakhs of people would be affected,” Chugh said.
Indian spokesman Jitender Bhargava said the decision has been taken to cut costs and keep the airline financially healthy. He said this system is prevalent in most European countries where travel agents charge consultation and service charges and have also diversified their business to stay afloat.
“We had never thought that we would have to earn revenue through a transaction fee but we just might have to do that. We also diversify and provide services like car rentals, hotel bookings, foreign exchange etc. to earn our keep,” said Rajji Rai, vice-president of the Travel Agents Association of India.
Chugh said while passengers would have to pay more for air tickets, the government would lose out on the service tax they got from the airline commission. “The airline commission had earlier come down from 9 to 7 per cent in 2001 and further dropped to 5 per cent in 2005. Also, we get commission only on the basic fare and not the fuel surcharge, which means the actual commission is about 2.5 per cent,” Chugh said.