Business - India;Transaction fee on air tickets from Nov 1

NEW DELHI: Yet another airfare hike is in the offing from Nov 1 as airlines and travel agents have mutually decided to add a new component, transaction fee, which would be a minimum of Rs.350 for domestic and maximum of Rs.10,000 for international tickets, an industry official said here on Monday.
The zero-percent commission regime will be replaced by the transaction fee, which will be levied along with the airfare, the official said, adding that this will be reflected as "other charges" on the ticket.
According to the official, the transaction fee (besides regular fares) will be at least Rs.350 on domestic air tickets for the economy class, and Rs.500 for business class.
The fee on international air tickets will be Rs.1,200-2,400 (economy), Rs.2,000-5,000 (business) and Rs.5,000-10,000 (for first class tickets).
These charges will be uniform across airlines, including low-cost carriers such as SpiceJet.
Presently, air travellers are not charged any transaction or booking fee. Airlines pay five percent of the base fare as commission to travel agents. But with airlines incurring losses since the first quarter this year, many international and domestic carriers have decided to write off commissions for travel agents, which is being resisted.
Agents are demanding the postponement of the decision to scrap commissions till March 2009. About 85 percent of airline bookings in India are done through travel agents, including online agencies.
"The matter has been sorted out amicably. Airlines will pay travel agents the transaction fee on air tickets booked by us," said O.P Bahadur, a senior official of the Travel Services International (TSI), a city-based travel and ticket agency, one of the eight big travel companies across the country that make up the Travel Agents Federation of India (TAFI).
"Air tickets booked through airline websites or their offices too would attract transaction fee too but that fee will be earned by the airline," Bahadur added.
The new fee structure will ensure agents get better returns than before on the gross ticket value.
"We would earn more than double of what we get on international tickets now," said Bahadur.
The airlines have also agreed to print transaction fee on the tickets till December next year.
When asked, an Air India spokesperson in New Delhi said: "We are already going through major losses. The new transaction fee will help us operate efficiently."
Besides the transaction fee, which will hit passengers from Nov 1, Kingfisher Airlines last week said it would increase its fare from Oct 1, which coincides with the start of the festive season.
Other airlines too are expected to follow suit by early next month.
Jet Airways CEO Wolfgang Prock-Schauer recently said here its carrier was considering a fare hike during the festive season.
Airlines have raised airfares at least six times this year. The increased fares have resulted in the number of people travelling by air falling to 3.04 million in July, down 12.65 percent from a year ago, the civil aviation ministry said last month.
It is the sharpest fall in air passengers in the four years since India's aviation boom started in the summer of 2004.
In June this year, demand, measured by passengers flown, had shrunk 3.8 percent from June 2007, said an airline official expressing apprehensions about further slowdown after another fare hike through the transaction fee route.