Business-India;Transaction fee may hurt your flight plans

Chanchal Pal Chauhan

NEW DELHI: Indian air travellers will have to shell out an extra Rs 350 to Rs 10,000 from November 1 for both domestic and international travel in the form of transaction fee, to be paid to travel agents.

This transaction fee will replace the conventional 5% commission of the travel agents, which is being done away from Friday.

All major carriers — Air India, Jet Airways and Kingfisher Airlines — will move from a ‘commission’ format to a ‘transaction fee’ format from Friday night. International airlines, too, are expected to move towards the transaction fee format soon.

The critical difference between the commission and transaction fee is that while the former was being deducted by the travel agent from the airline, the latter will be paid by the customer to the travel agent. The transaction fee will be part of the ticket price. It will be collected by airlines and handed over to the travel agent. While the travel agent had the flexibility to waive off or reduce the commission percentage, the transaction fee will be fixed and mandatory. However, it will be not applicable for tickets booked directly.

From Saturday morning, domestic passengers will have to shell out an extra Rs 350 for an economy class ticket and Rs 500 for a business class ticket. However, the real hit will be for international passengers who will be charged anything between Rs 1,200 for economy class tickets and Rs 10,000 for first class tickets.

The transaction fee will be applicable for both domestic as well as international sectors. It will be applicable per ticket, irrespective of the type of journey and the number of sectors, and would vary depending upon the area of travel. The system is already being practised by low-cost airlines — SpiceJet, Indigo and GoAir — in the domestic market, where agents charge a transaction fee on every ticket sold.

Air India executive director of corporate communication Jitendra Bhargava told ET: “We have taken the decision to migrate to the transaction-fee model. The travel agents will no longer cut their 5% commission currently being charged from us, but will take a transaction fee that will be part of the ticket price.” The three domestic airlines are expected to save around Rs 1,000 crore as commission payments to travel agents on air ticket sales. Air India and Jet are expected to save Rs 450 crore each and Kingfisher could be saving up to Rs 100 crore annually.