Airlines, agents meet today over commission

Indian travel agents and international airlines are meeting on Tuesday to resolve the stand-off on airlines' decision to cut commission to travel agents to five per cent in the next few months from the present seven per cent.

Travel agents and airlines have been at loggerheads over the issue as the former fear an immediate loss of revenue to the tune of Rs 100 crore, which would go up to Rs 200 crore in the long run.

Airlines point this out as a part of an international trend aimed at boosting the bottomline.

To bring airlines to accept their demands, the travel agents are expected to threaten to block ticketing services to airlines which have cut the commission rates and will divert traffic to airlines offering them higher commission.

Travel agents will, however, resolve to measures like preferential treatment to other airlines, which offer a better commission, only if the talks fail.

"The decision to cut the commission rates are not acceptable to us. We will try reach a solution acceptable to both," said Balbir Mayal, president, Travel Agents Association of India (TAAI).

Travel agents point out that out of the total 45 international airlines operate from the country, only six have taken the step to cut commission to travel agents.

Besides, they fear that if the conditions of these six airlines are accepted, the other airlines will also follow the suit.

Major airlines like British Airways, Lufthansa, amongst others have cut the travel agents commission to manage cost.

According to airlines, the decision to cut the commission reflects a change in market conditions and is consistent with the airline industry's strategy to manage its cost base, a key element of which is distribution costs.

Airlines point out that they have made major investments in technology to drastically reduce the selling costs of the travel trade.

According to airline companies they have made investment in developing auto fares, auto ticket sales returns, centralised reservation systems, trade websites, electronic ticketing, setting up of high-technology low-cost service centre and helpdesks.

In many parts of the world, carriers are reducing their remuneration to agents and agents are charging additional fees for services, which their customers require. Airline industry sources pointed out that some of the European carriers have cut commission rates in international market to zero from seven per cent.