Travel agent commissions may go

Airlines may move to a fee-based model

BY A CORRESPONDENT
March 2006
Travel agents may have have to forego their commissions if airlines decide to introduce the increasingly-popular fee-based model in India. Though there is no timeframe for establishing such a regime, airlines across the world are gradually moving towards a zero-commission model.

Currently, travel agents get a flat 5% of the ticket fare as commission. The more expensive the ticket, the more the commission. Earlier, the rate used to be 10%, which was subsequently brought down to 7% and then to 5%. According to India's leading financial daily Economic Times, there are moves afoot to change to a fee-based regime, where the agents get a flat fee of Rs 125 on each transaction.

Travel agents have mixed reactions to this. Some feel that this will bring in assured revenues, while some others said that the move will push the small ones out of business. if the South African example is anything to go by, no one has lost his job on shifting to the fee-based model; however, everyone in India is not convinced.

Indian travellers are increasingly relying on flight ticket bookings on the internet to sidestep hassles and avoid agents commissions, all from the comfort of home. This has taken away some of the revenues of travel agents, who used to monopolise the flight tickets scene a decade before. A travel agent felt that his firm will now have to offer value additions like insurance and special packages to stay competitive.

Air India already has a limited scheme of zero commission, where designated agents get a flat fee of Rs 125 , instead of the commissions route. Notably, Kingfisher Airlines recently increased agent commissions to 10%, to tap more traffic through this way.