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Home > Business > Business Headline > Report

Airlines, agents in open war over fees

Rumi Dutta in Mumbai | June 11, 2004 08:00 IST

The war between travel agents and international airlines over the latter's decision to eliminate commissions, erupted into an open war on Thursday.

Travel agents across the nation, under the aegis of the Travel Agents Federation of India, which represents their interests, have called for a bandh on Friday. If the airlines don't relent, they say, they will go on an indefinite strike.

International airlines to scrap agents' commission

Representative bodies of travel agents like the Travel Agents' Association of India and TAFI will be meeting the airlines on Friday in Delhi.

The international carriers, primarily west-bound airlines, meanwhile, are trying to get around travel agents altogether and approaching the customer directly.

Their marketing teams are now approaching corporate clients directly, and so, are competing with travel agents. Many airlines are also passing on the agent's commission as a discount to passengers directly, if tickets are booked on the Internet.

Travel agents cannot match the fares the airlines are now offering as they retain some portion of the commission.

In Friday's bandh, 833 travel agents will participate to protest against a group of seven airlines -- Lufthansa, British Airways, KLM, Air France, Swiss Air Lines, Alitalia and Austrian Airlines -- announcing a reduction in the travel agent's commission from 7 per cent to 5 per cent.

The west-bound carriers are further planning to completely do away with the travel agent's commission in the near future. Foreign airlines had reduced the commission from 9 per cent to 7 per cent around two years ago.

Travel agents fear that other airlines may also follow suit if they do not protest at this juncture. Around 33 international airlines operate out of India. Travel agents across the country do business worth Rs 1,200 crore (Rs 12 billion) a month.

Of this, international ticketing and other international travel services account for around Rs 800 crore (Rs 8 billion). Travel agents have also threatened to go on an indefinite strike if these carriers do not relent.

"TAFI shall not hesitate to agitate further in any way possible, and at any cost, as this is a matter of the very existence of travel agencies," said Yatin Dossa, president of TAFI.

"Around 70 per cent of travel agents, particularly small agents in the country, are expected to go out of business if airlines cut or completely remove the commission structure. Many people will be jobless. We have invested crores of rupees in our business. We can't let something like this happen," said a leading travel agent in Mumbai who will be participating in Friday's bandh.

While the airlines refuse to comment on their strategy, leading travel agents confirmed that the airlines are trying to bypass them.

A senior executive of a leading international carrier said on condition of anonymity, "corporate bookings are mostly business class bookings. This is the most lucrative segment and there is a major dogfight to grab a share of this market. Otherwise, around 90 per cent of the bookings are through travel agents."

The international airlines argue that they have to cut their cost of operations, especially at a time when they are hit by rising fuel prices.

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Number of User Comments: 1


Dear sir/madam, It is my view that in any business the producer,manufacturer are appointing agents thro them the functions are going on,for eg. a car ...

Posted by K.SEKAR



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