As a part of its cost-cutting initiative in the wake of surging international crude and Air Turbine Fuel prices, national air-carrier Air India plans to withdraw five per cent agency commission from October 1.
However, the move may make travel by Air India costlier as travel agents would then charge a transaction fee from passengers to compensate for the withdrawn commission.
"It has become necessary to review the remuneration pattern offered to our travel trade partners," an Air India circular dated June 20 and addressed to various travel bodies, said.
Accordingly, National Aviation Company of India will be reducing the existing standard agency commission from 5 per cent to zero per cent on all domestic and international tickets, the circular stated.
"The travel fraternity will be at liberty to charge a transaction fee from their clients directly," it said.
The travel agents' body, IATA Agents' Association of India, however, has protested the move, claiming that it would not only lead to high fares but also massive unemployment.
"Passengers travelling by Air India will have to bear the burden of additional expenses for travel consultation and ticketing. Besides, the government will stand to lose crores of rupee, which it earns in the form of service and income tax," IAAI President, Biji Eapan, told PTI from Kochi.
There are some 2,780 IATA-accredited travel agents and more than one lakh sub-agents and free-lancing ticketing agents in the country.
Air India in its last board meeting had discussed a slew of cost-cutting measures, including a 25 per cent cut in its sales promotion budget.
"Distribution costs need to be looked at critically as the department is offering various types of discounts, commissions in order to enhance sales," a presentation by Air India's Director (finance) on proposed cost-control measures had stated.
The airline pricing of a ticket includes fuel surcharge, but today it differs from airline to airline for the same journey, despite the same type of aircraft being used, Eapan said, adding, fuel surcharge is to offset any fluctuations in the ATF cost, and subsequently is to be merged with the base price of a ticket. However, this does not happen."
"The fuel surcharge continues to be shown separately by almost all airlines," he said.
"Therefore, in our recent national executive council meeting we have resolved that we will assume the responsibility for collection of fuel surcharge amounting to only 10 per cent of the basic fares on behalf of the airlines," Eapan said.
For collection of any fuel surcharge amounting to more than 10 per cent of the basic fare, the airline would have to pay a travel agent 9 per cent of the value of the fuel surcharge as 'collection fee' subject to a minimum fee of not less than Rs 200 for domestic and Rs 500 international tickets.
