Loss-hit airlines won’t pay commission to agents

Emboldened by the dramatic rise in Internet penetration and online bookings, the move by the Big Three will save them about Rs 1,500 crore a year. Jitendra Bhargava, executive director (corporate communications), Air India, confirmed that his airline had informed all three Indian travel agent associations. “Distribution costs account for 4 per cent of our operating expenses of Rs 16-17,000 crore a year. By eliminating commissions, we will save Rs 700 crore a year.”

Kingfisher Airlines and Jet Airways were not available for comment. But Travel Agents Federation of India (TAFI) confirmed it had received a formal letter from both these carriers too on their decision to eliminate commissions.

Agents, on their part, have hit back saying they would not book international flights for customers through Air India and Jet, which together have a 40 per cent share of the international market from India. Instead, they will book flights with international operators who still pay them the commission.

With zero commission, customers will have to book online or directly at the airline’s office. Of course, they can still tap their travel agent, who may demand a transaction fee.

Predictably, the airlines’ decision has left travel agents fuming. “In 2001, the commission was 9 per cent. In 2002, it was cut to 7 per cent and then to 5 per cent in 2005 with a promise that airlines would not touch commissions for another five years. They have gone back on their word,” said Praveen Chugh, president of TAFI. Travel Agents Association of India (TAAI), IATA Agent Association (India) and TAFI together represent the 4,000 travel agents.

“This will wipe out the 3 per cent commission agents make on airline bookings. We will have...