Travel agents challenge ministry’s stand favouring foreign airlines

A fresh round of tussle between foreign airlines such as Lufthansa,British Airways and Singapore Airlines and travel agents has begun with the latter challenging the civil aviation ministry’s decision stating that the carriers need not pay fixed commission to ticket-booking agencies.

Written by Nirbhay Kumar | New Delhi | Published:August 20, 2010 1:08 am

A fresh round of tussle between foreign airlines such as Lufthansa,British Airways and Singapore Airlines and travel agents has begun with the latter challenging the civil aviation ministry’s decision stating that the carriers need not pay fixed commission to ticket-booking agencies.

“Commission is the contractual right of travel agents as per IATA (International Air Transportation Association) resolutions and the PSAA agreement,” IATA Agents Association of India (IAAI) president Biji Eapen has written to the ministry.

The ministry in a letter to the aviation sector regulator Directorate General of Civil Aviation (DGCA) had last week ruled that foreign airlines cannot be forced to pay commission to the agents. It responded to a regulator’s directive to some airlines asking them to revert to fixed commission regime and desist from a transaction fee model.

“It’s clear that the commission will form part of tariff only if it is paid,not otherwise. There is no express provision in the Aircraft Rules making it mandatory for the airlines to pay commission to agents,” a communication from ministry to DGCA said.

While the fixed-commission model requires airlines to pay a certain part of the ticket price as commission to agents,travel agents collect a fee ranging from Rs 200 to Rs 3,000 from passengers for booking the ticket under transaction fee model.

“We have already filed a writ petition in Kerala High court for execution of DGCA order. Last week we made a special request for early hearing,” Eapen said.

Nearly 16 foreign airlines had in 2008 decided to stop paying fixed commission to agents and introduced a transaction-fee based model. The airlines argue that transaction fee model is a global norm and at a time when airlines are cutting cost to stay competitive this is most suitable. The travel agents have meanwhile resolved to fight the battle against airlines as well as aviation ministry.

In an internal mail sent to travel agents associations— Travel Agents Association of India (TAAI) and Travel Agents Federation of India (TAFI),IAAI president has said,“We do not expect any favourable response from authorities that is helpless before the financial and political muscle power of foreign airlines.”

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