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IndiGo to bring back transaction fee

January 03, 2014 08:42 IST

IndiGo to bring back transaction fee

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Aneesh Phadnis in Mumbai

This will make buying tickets on airlines’ websites cheaper.

IndiGo will allow agents to collect two per cent transaction fee on each ticket, following the Union government’s approval for the levy.

In a communication to agents, the Gurgaon-based low-cost airline said the fee would be applicable on basic fare and fuel surcharge and adjusted against sale or remitted to agents at the end of the month. The fee will be applicable on all sales from Tuesday.

IndiGo’s decision to implement the fee comes in the wake of Civil Aviation Secretary K N Srivastava’s order in September 2013 allowing airlines to include a transaction fee in the fare. In January 2013, the Supreme Court had said a transaction fee could not be collected from passengers in any form until the secretary took a final decision on the issue.

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Photographs: Vivek Prakash/Reuters

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Low-cost airlines do not pay a regular commission to travel agents and had instead introduced a transaction fee that was collected by agents on each transaction.

These airlines pay a productivity-related sale incentive each month and on annual sale but there is no regular commission on an ordinary sale. SpiceJet and GoAir are yet to make an announcement on the restoration of transaction fee.

In his order, Srivastava said transaction fee, commission or convenience fee were all the same — payment of remuneration to an intermediary. The order said all these were permissible, if shown as part of the fare, and no sum was collected from consumers over this.

The order also allowed airlines to follow dual pricing (differential fares).

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Photographs: Rupak De Choudhuri/Reuters

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“Price differential can exist between a ticket purchased directly from an airline counter or their website or through its website and through an intermediary,” the aviation secretary’s order said.

The imposition of transaction fee will make buying tickets on airlines’ websites cheaper.

This will also boost airlines’ web sales. However, the relief is partial because despite the civil aviation secretary’s observation, airlines collect convenience fee over and above the ticket fare for those paid for with a credit card.


Photographs: Adnan Abidi/Reuters
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