Business - India;Travel agents threaten boycott of air ticket sales

Mumbai/New Delhi: Alarge section of travel agents is threatening to boycott ticket sales of the country’s largest private airline Jet Airways (India) Ltd and Germany’s Deutsche Lufthansa AG from 1 October, as the carriers plan to abolish the existing 5% commission from 1 November.
This is apparently the unanimous position of all associations representing travel agents, though two associations have not announced a boycott and a third has announced a staggered boycott schedule of some airlines. Jet Airways and Lufthansa are in focus because they were the first to stop commissions.

Wings clipped: In line with international practice, Indian airlines have decided to stop paying commissions to reduce distribution costs. Ashesh Shah/MintIn India, 85% of airline tickets are sold through agents. But in line with international practice, Indian airlines have decided to stop paying commissions to reduce costs as they face a likely combined loss of $2 billion (about Rs9,100 crore) this fiscal year.
The Travel Agents’ Federation of India, or Tafi, and the Travel Agents’ Association of India, or Taai, have not announced an official boycott. Taai, in fact, says it is in dialogue with airlines to introduce a transaction fee. The two associations jointly claim to represent about 80% of around 2,800 agents who are accredited to the International Air Transport Association, or Iata.
Some of their member agents, however, said on condition of anonymity that they have stopped selling Jet Airways and Lufthansa tickets.
“I have already started diverting Jet Airways passengers to British Airways,” said a travel agent. “We wanted to start (the boycott) with Nacil but later zeroed in on one domestic and international private carrier each.”
Nacil, or National Aviation Co. of India Ltd, runs Air India.
After Air India decided to scrap the 5% commission on tickets that it paid to travel agents, other foreign airlines decided to follow suit, except British Airways Ltd.
“As of now, we have not taken any decision about eliminating 5% commission,” said British Airways’ area commercial manager for South Asia, Amanda Amos.
Jet Airways chief executive Wolfgang Prock-Schauer was not available for comment.
Members of another travel agents’ association, Iata Agents Association of India, or IAAI, have decided not to sell tickets of Air India till the end of November. Its members have come up with a schedule for four other airlines: Jet Airways: from 1-15 October, Kingfisher Airlines Ltd: from 16-31 October, Lufthansa: from 1-15 November and Singapore Airlines: from 16-30 November.
“We cannot boycott all airlines at the same time as we don’t want this to affect business,” said Biji Eapen, IAAI president. “Our enemy is not one airline but all the airlines, and this is the first stage. We will proceed further depending on the outcome from boycotting these two airlines.”
IAAI has disassociated itself from the talks with airlines and travel agents to impose a transaction fee on passengers instead of the 5% commission.
The commission had been cut in two stages from 9% to 7% and then to 5%. Eapen, who wants the commission of 9% reinstated, said, “Over 80% of the Iata members in India are supporting the 9% commission demand. Even other agents are supporting this.”
IAAI plans to observe a “black day” in Kerala on Monday, when Jet Airways starts flights from the state capital Thiruvananthapuram to Muscat.
Tafi national general secretary Ajay Prakash said his association has not taken any official stance on a boycott.
C.V. Prasad, president of Taai, said his association was in dialogue with airlines to introduce a transaction fee. “We are very happy with the progress in the discussions.”
He did not disclose details about a “workable solution” for the proposed transaction fee, but said Taai would be “coming out with a recommendation” on the amount following a detailed survey.