Faced with the prospects of a staggering Rs 8,000-crore loss this year, Air India-India, Jet and Kingfisher have, in a bold move, decided to do away with the 5 per cent commission they pay agents selling their tickets from October 1. While it is not certain if airlines will pass on the savings to passengers, it will certainly deal a massive blow to some 4,000-odd travel agents with annual billings of Rs 36,000 crore.Emboldened by the dramatic rise in Internet penetration and online bookings, the move by the Big Three will save them about Rs 1,500 crore a year. Jitendra Bhargava, executive director (corporate communications), Air India, confirmed that his airline had informed all three Indian travel agent associations. “Distribution costs account for 4 per cent of our operating expenses of Rs 16-17,000 crore a year. By eliminating commissions, we will save Rs 700 crore a year.” Kingfisher Airlines and Jet Airways were not available for comment. But Travel Agents Federation of India (TAFI) confirmed it had received a formal letter from both these carriers too on their decision to eliminate commissions. Agents, on their part, have hit back saying they would not book international flights for customers through Air India and Jet, which together have a 40 per cent share of the international market from India. Instead, they will book flights with international operators who still pay them the commission.At present, 90 per cent of ticket sales for full-service carriers such as Air India-Indian come through agents. This is because agents pass on a part of the commission to customers as discount, making tickets booked through them cheaper than those booked directly with the airline. With zero commission, customers will have to book online or directly at the airline’s office. Of course, they can still tap their travel agent, who may demand a transaction fee.Predictably, the airlines’ decision has left travel agents fuming. “In 2001, the commission was 9 per cent. In 2002, it was cut to 7 per cent and then to 5 per cent in 2005 with a promise that airlines would not touch commissions for another five years. They have gone back on their word,” said Praveen Chugh, president of TAFI. Travel Agents Association of India (TAAI), IATA Agent Association (India) and TAFI together represent the 4,000 travel agents.“This will wipe out the 3 per cent commission agents make on airline bookings. We will have to charge a transaction fee from the customer now, but he won’t be willing to pay much,” Chugh said. Globally, airlines do not pay commissions, but agents charge a transaction fee from customers. “Agents in India have been getting handsome fees for doing next to nothing. An executive who wants to travel first class to New York asks an agent to book his ticket. The agent pockets Rs 22,500 as commission on the Rs 4 lakh ticket,” an airline source said, explaining the rationale behind the move.5 per cent The commission airlines pay agents for selling their ticketsRs 1,500 cr The amount Air India-Indian, Jet and Kingfisher will save annually after axing commission4,000 Approximate numer of travel agents in the country Rs 36,000 cr Their annual billings.They have decided not to book international flights through Air India and Jet
