Pay more: Travel agents tell budget carriers

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Pay more: Travel agents tell budget carriers

Travel agents are now looking to budget airlines for more money. That's because commissions from low cost carriers are higher than full service airlines.

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By Shivani Muthana /CNBC-TV18

Travel agents are now looking to budget airlines for more money. That's because commissions from low cost carriers are higher than full service airlines.  

It's a tough summer for travel agencies who sell tickets for full service airlines like Jet , Kingfisher , and Indian Airlines . Most of these airlines have been reducing their commissions over the past few years from 9% to 7% to 5% making it an economically unviable proposition for travel agents.

Kamal Ramchand, Chairman, Tulip Travel Services , said, "It depends on fare to fare. On fare between Rs 999 and Rs 2,000, we make 5% per ticket. So, that's just Rs 100 per ticket. Hence, we like to sell low cost carrier more than regular at this point of time."

Fly budget, say agents, that's because even though budget airlines like GoAir, SpiceJet, and Indigo, don't give agents any commissions on the basic fare, a service charge of 5-6% is passed back. That's not all.  The agent also earns a service fee of anything between Rs 100-400 a ticket.

Over the past few months, the travel agents federation has been speaking against this skewed commission system and demanding that full service airlines pay them on the full fare instead of the the basic fare.  Even so, these airlines are looking to push commissions down to zero.  

Wolfgang Prock-Schauer, CEO, Jet Airways , said, "Internationally in Europe, US, Canada and parts of the Gulf, agents work on 0% commission schemes and charge transaction fee which is a good way to go."

But its not quite the way that travel agents want to go. These fees are negotiable and in a highly competitive market many agents pass back these fees back to retain clients. So, what are agents left with? Only the power to bargain.

They claim that nearly 80% of the ticket sales come from the off-line segment and that they say means that full service airlines may still not be in the position to call the shots. But the airlines are all set to go the zero commission way.