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Cash-strapped Jet turns the squeeze on travel agents

November 03, 2018 08:12 IST

Want last year's bonus? Sell our tickets: Jet Airways tells travel agents.
Aneesh Phadnis reports.

AJet Airways plane about to land

Cash-strapped Jet Airways has virtually compelled travel agents to sell its tickets to avail of last year's incentives.

The move has enabled the airline to increase its sales and generate cash, but it has rattled the travel agents as the airline's financial condition is grim.

Jet, however, has claimed that travel agents are supporting its initiative in light of current challenges faced by the aviation sector in India.

Jet Airways does not pay basic commission, but offers 4% productivity-linked bonus, which is linked to the sales target.

Jet's move is seen as unprecedented because the bonus is paid upon the completion of the sales target after the close of the financial year. But for the first time, the payout is being linked to or adjusted against ongoing sales.

 

While there have been delays in the past in the payout of the agents' bonus, the latest move has put travel agents in a bind. Travel Agents Association of India and Travel Agents Federation of India members have complained about it to the management.

In FY 2018, Jet Airways incurred Rs 28.2 billion as sales and distribution expense and this included Rs 11.21 billion in commission. The exact amount of outstanding towards productivity bonus could not be ascertained.

The airline has allowed agents to retain 3% of the ticket amount and remit the balance to it under the weekly settlement mechanism. The deducted sum is being adjusted against last year's bonus.

"Agents have no choice now but to keep selling Jet Airways tickets to recover last year's dues. Our ongoing sale will also entitle us for the bonus upon completion of the target and given the airline's financial woes, there is no clarity whether it will be paid on time," a TAFI member complained.

"Our members are worried. When Kingfisher Airlines went bust, agents lost millions worth of commission and bonuses," said Jyoti Mayal, secretary general, TAAI.

"We understand the airline is facing financial difficulties. Ideally, the airline should have offered the productivity bonus in two or three tranches. In the current form of adjusting against sales, it could take agents even two years to recover the bonus of FY18," another travel agent complained.

"The travel agent fraternity has been supportive of Jet Airways' initiative, in light of the current challenges being faced by the aviation sector in India. Given that the relationship between a principal and an agent is confidential, the company is unable to comment further," Jet Airways said in its response.

Aneesh Phadnis
Source: source
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