Agents, European Airlines At Loggerheads Over Commissions

Air-India Not To Reduce Commissions

The on-going battle between the agents' fraternity and European carriers persists despite continuous dialogue. Charmaine Fernz brings you the latest developments on this issue

'The heat is on' could be the exact phrase to describe the on-going dispute between the agents' fraternity and European carriers. Though a final decision would be taken on July 30, 2004 at the time of going to print the following sentiments were expressed. If one has to analyse the current scenario both agents and the concerned airlines are not budging from their respective situations. European carriers are stuck on their decision to bring down commissions from 7 to 5 per cent effective September 1, 2004 (to add to these woes United Airlines and American Airlines have also sent out notices for commission reductions by September 15, 2004), while the agents are willing to go any extent to reverse this decision.

However, in a recent development, TAFI president Zakir Ahmed confirmed that a historic meeting was held on July 24 involving TAAI, TAFI, IATO and ADTOI, where a joint resolution to stop selling Lufthansa ticket sales and no dialogue with the airline would undertaken. The TAFI president also said the agents unitedly were upset that "whilst negotiations were still underway towards finding a mutual solution to the deadlock, Lufthansa had taken a serious step of serving caveats to agents."

Currently both associations ie TAAI and TAFI have decided to tackle the issue jointly as the cause is one. Explains Balbir Mayal, president, TAAI, "We will not accept this change as it is a unilateral decision taken without talking to the industry and agents alike. The entire process is unjustified. The time is certainly not right in India to accept this change. Though it may be considered a global change, one cannot compare the workings of the US and European travel industries with that of India. Here an agent works on 95 per cent credit which is not the scenario in the US or even Europe. To add to this, credit card transactions do not even account for one per cent in India and technology is not that advanced. The day all these factors come into place and the industry gets organised, one can consider bringing in such drastic changes. This environment for change is only perceivable in the next two to three years. We are, at the moment, involved in cordial talks with the airlines and hope that the issue is resolved. However if they do not accept our stand, we will be forced to take certain unfavourable decisions."

TAFI’s new president Zakir Ahmed, added, "We will not accept this issue and are working together with TAAI to resolve it amicably. The offer of a postponement of the proposed commission cut was unacceptable and we would push for a reinstatement of commisssion rates to nine per cent and a compensation with retrospective effect for the period that the seven per cent regime exists."

The twist to the entire scenario is the fact that the national carrier, Air-India has decided not to go ahead with the commission reductions. Revealed P P Singh, regional director - India, Air-India, "After the last reduction of commissions from 9 to 7 per cent in 1992, we checked out most of our stations internationally on a regular basis and found that they have been working on 7 per cent. Bearing that in mind, we have decided not to reduce commissions to five per cent." This decision will presumably come as relief to a lot of agents. Middle-East and South East Asian carriers decided to take a stand after Air-India announced their decision.

Space Travels CMD and former TAFI president Yatin Dossa commended the national carrier for its supportive stance, saying that "a resolution had been passed by all associations that they shall support Air-India in all sectors that they operate."

Elucidating further Ajay Prakash, chief executive, Nomad Travels said, "It would be surprising to know that the Kenya Association of Travel Agents are facing a similar situation, where the commission structures are bring brought down from 9 to 8 and now to 6 per cent. It is a fact that these European carriers are targeting the developing countries. However, what the airlines fail to understand is that agents fulfil a need and they offer a wide array of services, which is not being done in the US, UK or even Europe. This decision if implemented will put a lot of agents out of business. And if one analyses the airlines' stand, a two per cent cut is merely an interim decision. Their ultimate goal is to reduce the commission structures to zero. Subsequently, one needs to realise that this decision has not been approved by the DGCA, so, with what authority has it been declared. To cite an example: Japan and Greece fought and bought back commissions to 9 per cent. So, we are not going to give up the fight easily."

(Inputs from Bhisham Mansukhani, Mumbai)