Online travel cos overjoyed as govt unbundles airfares

The next time you fly, get ready to pay extra if you want to check-in more than 15 kg of baggage on a Jet Airways flight. This, as the government-approved 'unbundling' of airfares takes effect. But looks like airlines are not the only ones to benefit from this move.

Even though travel agents are upset as this could further reduce their commission, online travel companies like MakeMyTrip are trying to make the best of the situation, reports CNBC-TV18's Sunanda Jayaseelan.
Falling commissions from full-service carriers, zero commissions from low-cost carriers, and now unbundling of airfares — travel agents have reasons to be worried.
But not everyone's complaining. Other than airlines who stand to gain more revenue from unbundling, online travel agencies (OTAs) like MakeMyTrip have spotted a silver lining —since most services relating to ancillary revenues or unbundled services need to be conducted online, this is likely to benefit companies like MakeMyTrip which could see more visitors to its website.
The online travel portal already works with low-cost carrier Indigo to offer services like early check-in and hopes to offer more services, going forward.
Deep Kalra, founder and CEO, MakeMyTrip says, "I think the online business is going to keep growing. Around four years ago, when we launched our services in India in 2005, we were the first OTA. Today, close to 40-percent of all business is online of which OTAs hold  50-percent of the travel-market share of which our overall market share is about 12.5-percent."
Though they do acknowledge that margins will be hit due to unbundling, OTAs are hoping to minimise the impact on revenues through increased volumes and are also investing in better technology to help draw more customers.
Madhavan Menon, MD, Thomas Cook India, says, "All the doom and gloom around me is worrying because though we have not seen the impact of it in the outbound business, I am still concerned as to where this is heading. If we don’t see an improvement in the economy, my view is that there will be some lag effect on our industry. We are trying to clean up our act with focus on technology and productivity."
But even as online travel companies try to make most of the situation, the travel-agent industry as a whole is against unbundling. Consequently, CNBC-TV18 learnt that industry body TAAI along with its counterparts from the hotel and toursim industry have constituted a joint committee, the Federation Of Indian Tourism And Hotels or FAITH to make a joint pitch to help improve commission and remuneration.