The Directorate General of Civil Aviation’s (DGCA’s) order asking domestic and international airlines to abolish fuel surcharge and include it in basic fares would increase the earnings of travel agencies.
That is because the commissions these agents get from international airlines is expected to rise by 30-50 per cent. Currently, the commission paid to travel agents is calculated on base fares.
“In the present fare structure, 30 per cent is the fuel surcharge and if that gets integrated, it will increase our earnings by over 30 per cent,” said Ajay Prakash, general secretary, Travel Agents Federation of India.
“This will impact the commission received from the international carriers by as much as 50 per cent,” said Rajji Rai, president, Travel Agents Association of India.
Full-service domestic carriers Jet Airways, Kingfisher Airlines and Air India already pay a 3 per cent commission on fares, including the fuel surcharge. The low-cost carriers do not pay commissions. International airlines, who earlier had a fuel surcharge component, have merged it and have started paying commission to agents.
“We have merged the surcharge with the fare and have started paying the agents an increased commission. This increase, in our case, has not been much but it will vary from airline to airline,” said Pran Dasan, regional manager (South Asia), Kuwait Airways.
“We currently pay a commission of 5 per cent to the agents and we are working on the DGCA order. Anything that comes out would benefit the agents and consumers,” said a Cathay Pacific executive. He also added that their fuel component is much less and merging it would not make much impact. There are around 70 international airlines operating in the country and up to 50 of them pay commissions. At least 14 do not pay commission.
Aviation Turbine Fuel (ATF) prices account for 35-40 per cent of an airline’s operational costs. Airlines use the fuel surcharge as a common measure to increase ticket prices, especially with every hike in fuel prices.
On a Delhi-Mumbai flight, Air India charges a fuel surcharge of Rs 3,100 on a base fare of Rs 150. Jet Airways charges Rs 3,400 as fuel surcharge on the base fare of Rs 300, while Kingfisher charges a fuel surcharge of Rs 3,400 on a base fare of Rs 1,250.
