Travel Agents See Opportunity Of New Business Model With LCCs

Even as low-cost airlines bypass travel agents, necessity is bound to force them to reconsider these middlemen sooner or later. Industry feedback reveals growing dissatisfaction amidst contracting commission levels and aggressive promotion of e-ticketing, reports Hazel Jain and Bhavika Jhaveri.

Their relationship seems to be souring, much like estranged couples. Indian low-cost airlines and travel agents appear to be of diverse opinion once again - whether or not agents are an essential link between these airlines and end-buyers.

Although the business models of low-cost carriers do not account for agent commission, some make an exception to the rule. For instance, the international low-cost carriers easyJet and Ryanair, and Air Deccan and Spicejet closer home have all, to some extent, considered agents for distribution of their tickets. Despite this, the agent community is dissatisfied. Philip Monteiro, CEO (Tours) of Melba Tours & Travels, says, "It is simple; if airlines cover us, we cover them. We are not here to do charity work." He is of the opinion that the two Indian low -cost airlines that have taken to air are not very responsive towards agents. “Air Deccan quotes two prices for its tickets - one for agents and one for its direct clients and the ones meant for agents have been marked up from the market price. So who will pay more and buy from us?" Monteiro adds. Echoing a similar reservation, V S Abdulkarim, managing director of Creative Tours & Travels, opines, "These airlines should implement strategies which would make a win-win situation for both parties."

Agents - An Easier Option

As far as adding value goes, agents agree unanimously that they are an easier option for travellers than the Internet. Monteiro says, "It is easier to book tickets through us. Point-to-point bookings are definitely easy through the Net and people do use it. But when it comes to route bookings, it gets too complicated and that is where we come in."

Mona Mehta of Navlakhi Tours & Travels gives another perspective. She says, "Although all airlines have call centres now, it still makes more sense for travellers as well as LCCs to use our services. First of all, agents can offer a choice of airlines under one roof whereas call centres offer tickets for only that particular airline. So customers would have to call five different places to get the price for five different airlines. This is specially complicated when there are route bookings. Our involvement will only help customers save time." As far as airlines are concerned, Mehta says that they spend much more on staff for these centres, which is a continuous cost, as against that of travel agents who are paid only on sale of tickets. She adds that even e-ticketing might not work in India considering the miniscule amount of Internet users and the restrictions associated with it. "But this has worked in the West, so maybe it will be the next big thing in India as well," she concedes.

Some agents even go to extremes. Nina Mehra, manager at Pyramid Travels, says, "The situation vis-à-vis low- cost airlines is really bad for us. If things continue this way, we will probably have to shut shop. Most of these airlines have booking services on the Net. So whenever there is a connectivity problem, we cannot get through their reservation and booking system. Travel agents hold an advantage because we deliver tickets to customers at their doorstep." She also mentions that the lack of computer literacy and poor access to the Net are the main reasons why 95 per cent of the total bookings are through travel agents.

Plastic Peeves

Another point of argument that agents put across is the benefit that they provide to non-credit card users. Abdulkarim says, "A large percentage of Indians are not comfortable with credit card transactions, cancellation procedures and refund on the Internet, which is why they are reluctant to use their credit cards. They are more comfortable with travel agents." He adds that this, combined with the boom in the aviation industry, will make the agents an important aspect of air travel.

Another advantage as far as agents are concerned is that they sometimes even offer credit facilities, something which low- cost airlines do not. Given that many agents show dissatisfaction as far as low -cost airlines are concerned, there are a few who generously advocate Kingfisher to customers, although the airline does not tag itself as low cost. Monteiro says, "Kingfisher is currently the most favourite airline among customers as well as agents. It has kept us in mind and that is why they are getting good business. We get many calls asking specifically for Kingfisher even though its tickets are available on the Net."

Reinvent or Perish

Low-cost airlines seem to be the future of the aviation industry; they connect places that are not operated by other full service carriers. In the US for instance, agents do not earn commission from airlines - they charge for their service. And it appears that India is well on its way to following this trend.

D P Yadav, manager of Compass Travels, feels that the low-cost carriers should not include travel agents as at best it is a loss-making proposition for agents due the virtually zero commissions offered by these carriers. "Most low-cost airlines are not going to survive for too long anyway because it is difficult to sustain in these times of escalating costs. How will they bear the fuel charges?" he asks.

Another industry member, who did not wish to be named, believes that online booking in India will take time to gather momentum. "Earlier, we earned nine per cent commission, now its reduced to five per cent. In such a scenario, the bigger travel agents will be able to survive because they have other avenues for revenue, of which business travellers will be the major contributors. One does not expect the Tatas and Birlas to sit online and book their tickets; they would require tour operators to do that." He ends prophetically, adding that the role of travel agents is bound to undergo a significant change - evolving from mere middlemen to travel consultants.