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HomePeopleInconversation‘Agents' community is controlled by certain vested interests’

‘Agents’ community is controlled by certain vested interests’

Biji Eapen, President, IATA Agents Association of India (IAAI), feels that commission issue can be resolved within three days if associations and agents show unity and tackle the problem together

Airlines the world over are not paying commission, then why do you’ll insist that airlines in India should pay commission?

This statement itself is wrong. All these airlines operating in India are paying commission in different countries according to the law. Israel, Yemen and many other countries mandates seven per cent commission by government intervention. Commissions are paid in Australia and Japan. Gulf countries mandated with seven per cent commission as service fees added to the ticket fare by agents and airlines and governed through government decree.

Airlines have many avenues to sell tickets, like online payment, call centres, home delivery of tickets; airline websites etc. In such a scenario, why should they pay commission to travel agents?

It is purely a misunderstanding.  For the sake of transparency and in the interest of Travel Trade, we would like to share certain facts and developments, with you.  FIA in their latest Appeal filed on 6th February 2013 under Aircraft Act 3B with Secretary, MoCA against the DGCA order of 17th Dec 2012, where IAAI is also impleaded as a Party, stated, “Travel Agents are an important part of the distribution set up for an airline.    There are over 20,000 travel agents (approx) spread over India who help sell airline inventory efficiently.  Travel Agents consistently contribute over 60-75 per cent (approximately) of the overall business to the airlines.”

When these Indian carriers openly admit their dependence and indispensability of travel agent network, how they can ignore or neglect the traditional travel agents?  As such, how can they reject/neglect agents’ plea for fair remuneration?

How do you think the default of Spring Travels impact the travel industry? Why did it happen? Is there a lesson for the airlines?

It is only a beginning.   When there is no commission and there is no web parity with market fares, coupled with the stringent financial policy and the impending weekly payment system, such incidents could be repeated.  It should be a warning to the airlines that, if they depend only on a couple of favoured agents and support them with PLB to achieve the target, any ‘default’ will be terrific.  

But  countries like Israel,  through the Competition Commission  of  Israel,  provided  exclusive protection to  travel agents against IATA , that any  failure to honour the  BSP cheque payment should not be treated as a  “default”. Agents used to give credit facilities and flow of money could be affected in different ways.  Hence the law mandates IATA and airlines to adjust with the situation. Hope the day will come in India, that our competition commission of India and the regulatory authorities may take such a positive approach.  

Why don’t travel agents charge service fee directly from the client rather than depending on the airline to give you commission?

The Aircraft Act 1934 and Aircraft Rules 1937 regulates that Transaction Fee is illegal in India.  Rule 3 (54 A) reads as follows “’Tariff’ means any fare, rate or charge collected by an air transport undertaking for the carriage of passengers, baggage or cargo, including the commission payable to the agents, and the conditions governing such fare, rate or charge.”

Hence, as per the national law, the commission is an integral part of the Fares which forms the Tariff. In other words, airline should consider ‘agents commission’ as a component of fare. DGCA Order of 5 March 2010, issued as per Kerala High Court directive mandates, “Commission as the rightful remuneration.” It has stated that transaction fee, Net fares and Zero commissions are against the Law. Also, affirmed that “commission cannot be replaced with transaction fee.”

DGCA repeated their order against Transaction Fee. The High Court and Supreme Court banned the collection of transaction fee from customers. So, do you want to advocate an illegal policy to be adopted in India?

Consequently,  the commission as defined in Aircraft rule , which is included in the FARE,  are  collected from  passengers  by  the  Airlines,  are  not  paid over to the  agent  for the sale of ticket.   This amount is neither discounted to the traveling public nor reduced on the Fares.  Hence, the airlines ought to pay our legal remuneration.

Where is this money been going and in whose kitty all these days?  Without any accountability, this money is being going the airlines kitty. No ST, no IT.

Why is the agent community not united on this front?

The agent community is controlled by certain vested interests.  Many agents still ignorant on “travel agents handbook” even. Travel Associations often aggressive like Travel Clubs. Hence, many a times, IATA rules and regulations were misinterpreted and misguided to suit the situation. The ordinary agents are being carried away with foreign conventions, FAM trips and five star parties. They never bothered to see who their sponsors are.   

Look at the realities –the unmatched equation: While IAAI is trying to establish commission @ five per cent as per the National Law, certain vested interests had approached, negotiated with airlines for zero commission, reduction of commission and transaction fee implementation. Even AI & 9W claimed that reduction of commission to one per cent and TF implementation in July 2012 was insisted by certain associations.

If there was unity among the associations and agents, all these problems and issues could have been sorted out within 72 hours.  Even today, we request, if all other associations and agents give their whole-hearted support to us, we can sort out all our issues within hours time.

How much of the airline inventory does a travel agent sell considering that the agent is one of the many channels of distribution?

Indian carriers themselves stated that 60 to 70 per cent business is being promoted by travel agents.

There has been a talk of boycotting airlines. Will this work in the current environment?

Since IAAI is trying to enforce implementation of agency commission as a statutory right under the Indian Aircraft Act of 1934 and Rules 1937 with the uppermost Indian Regulatory Authority and Court of Law, IAAI do not foresee any strike or boycott.

 We are focusing on the DGCA Order dated 5 March 2010  and 17 Dec 2012, SC Order dated 23 Jan 2013, Writ Petition W.P.(C)No. 275/2013 pending at Kerala High Court and the Appeal Petition with Secretary, MoCA under Rule 3B of Aircraft Act of India filed by FIA.


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