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Rediff News  All News  » Business » SIA refuses to budge as agents continue boycott

SIA refuses to budge as agents continue boycott

January 21, 2009 11:17 IST

Singapore International Airlines has decided to stick to its guns on its 'no-commission' stance to travel agents, even as the latter claim that the airline's sales have gone down by 80 per cent in the last fortnight.

About 2000 travel agents across the country are not selling the airline's tickets in protest against the decision not to pay any commission.

SIA, however, says it has not been impacted by the boycott. "There is no change in our zero commission stance," said Chai Woo Foo, General Manager, Singapore Airlines, India.

Foo, however, admits to loads being lower than last year on all routes. However, its outlook in India continues to be positive.

There will be a temporary reduction of one flight per week from Delhi between January 22 to March 25 and two flights per week from Mumbai between January 27 to March 26.

"But this is part of the overall network wide review to adjust the capacity in the short term to current demand; including flights to East Asia, Australia and Europe," he added.

Protesting the non-payment of a commission of 5 per cent on ticket sales by airlines to travel agents in India, around 2000 agents and online travel portals associated with agents associations like Travel Agents Federation of India, Travel Agents Association of India, IATA Agents Association of India among others decided to boycott sales of Singapore tickets in India from December 29.

While around 12 international airlines have taken the zero commission stance, the agents have decided to boycott Singapore Air since it is one of largest carriers operating into India and once it agrees to their demands, others are expected to fall in line.

The agents had stopped selling Jet Airways tickets last year, when three full service carriers -- Jet, Kingfisher and Air India -- had taken a similar stance of no commission to be paid to them. The boycott had made all three carriers change their stance and agree to pay a commission of 3 per cent on the total fare.

Agents said that the boycott has considerably affected SIA's sales in India since travel agents account for 80 per cent of the airline's overall India sales.  The carrier earns around 11 per cent of its global revenues from India.

"I don't understand why they are destroying the distribution network to cut costs. Even airlines in developed markets have suffered under the zero-commission regime," said Ajay Prakash, national general secretary, TAFI.

Prakash added that in lieu of a commission, the carrier is now trying to woo agents back with a productivity linked bonus of 1.5-2 per cent. PLB to a travel agent is calculated on the basis of a yearly sales target that has to be met by the agent.

"SIA is trying to woo the agents by giving us PLB of 1.5-2 per cent, which they might increase next week. But we have clearly said that we will only agree to a commission," said Prakash.

"If we give up now, all our efforts will be in vain. They have tried all kind of tactics, they tried creating a rift within our fraternity, but we tackling that. We are determined to not sell the airline's tickets. We've done this for 17 days, and we'll continue doing so. You can already see the impact of our decision, the airline's had to withdraw two flights from Mumbai and one from Delhi." he added.

Industry insiders said since airlines are already faced with a 10 to 12 per cent drop in international bookings made from India, the boycott would surely hurt Singapore Airlines.

Agreed Pradeep Lulla, vice president, TAFI, "They are now selling a one-way ticket to Singapore from Mumbai for as low as Rs 7,000.

They have little choice now that we've boycotted them." Lulla added that once the agents are able to make a headway with Singapore Airlines, others like British Airways, Delta, Lufthansa will follow.

"European airlines annually earn nearly Rs 700 crore (Rs 7 billion) from India, and Lufthansa's share in that is about 30 per cent. So they will fall in line," said Lulla.

Other carriers like Etihad, on the other hand, are following the trend set out by the Indian carriers. "We followed the flag-carrier and the other Indian airlines.

When they planned to move to the zero-commission regime, we announced that we would do the same. But now that the industry's moving to a three per cent commission on basic fare and the fuel surcharge, we will do the same since March 1, 2009," said Neerja Bhatia, country manager-India, Etihad Airways.

Geetanjali Shukla in Mumbai