Crashing commissions: Travel agents in air pocket

By Shivani Muthanna, CNBC-TV18

The Travel Agents Federation of India met today to oppose the cut in commisions on sale of air tickets. The commision will go from 5% to 0% from October this year. The Travel Agents Federation has said that it will unite to earn its rights of livelihood.

Travel Associations and airline chiefs will meet on July 24 to arrive at a model that is agreeable to both. Airlines will save Rs 500-700 crore if commission is brought down to 0%. Travel agents have said that airlines are in losses due to overcapacity and airfare price war. Travel agents will charge passenger service fee if 0% commission is imposed.

“Around 85% of the distribution is done only by travel agents. In today's stage, India is still not mature enough as a market. You have only 10 % using the Internet, not beyond that. So, how can the airlines do their own marketing? They need skilled staff. Otherwise, they will have to employ us to do the marketing,’ said Vasuki K Sundaram, Chairperson, TAFI.

Crashing commissions

Year            (%)

Post 9/11      7
2005             5
2008 (Oct)     0