Zakkir Ahmed President, TAFI

Dear Sir,

Like millions of our countrymen, we at Travel Agents Federation of India (TAFI) had also watched your budget presentation to the nation for the FY 2006-07. We would like to bring to your notice the following matter, which in our opinion will adversely affect the travel industry in India as a whole and our fraternity in particular.

We are concerned about amendment to the service tax as approved in the Finance Bill 2006 introducing 12 per cent service tax for all international journeys commencing from India in any class other than economy. This, in our opinion, will have the following repercussions:

• Ticket prices in India will become noncompetitive vis-a-vis tickets sold abroad for the same journey. A substantial number of business and first-class passengers travelling out of India will make arrangements to buy their air tickets outside the country either through their branches or their associates abroad. This will deprive the Indian travel agent community of their legitimate income.
• The above phenomena will also lead to a flight of capital from the country and more importantly, deprive the exchequer of significant revenue, currently accruing through service tax paid by Indian agents thereby defeating the very purpose of your proposal.
• A good number of passengers from the medium-sized business houses who travel by first and business class will switch over to economy. This will create shortage of seats in the economy class and will hurt the common man.
• With the reduction in number of passengers in both first and business class, most of the airlines will find their Indian operations economically inviable. This may result in their downsizing offices and outsourcing business and loss of employment to hundreds of people who are presently employed by several foreign airlines.
• Since this law is not applicable to the state of J&K, some agents might open office there and divert business from all over India thus depriving the majority of the agents of their legitimate business opportunity.

You may perhaps recall that several years ago, a similar tax but known by a different name, foreign travel tax was introduced but was subsequently rolled back to encourage tourism from and to India. We are quite sure that you may have received several representations from other trade bodies, organisations and airlines regarding this. May we therefore earnestly appeal to you Sir to reconsider the implementation of the above service tax. We look forward to a favourable decision.

Courtesy: TAFI newsletter Connect

A friend from Maldives mentioned that tourists arriving from European countries take back all non-biodegradable garbage with them when they leave. It is a matter of good culture; it might also be a part of the law.

Similarly, promotion of eco-tourism in Karnataka can become a grand reality with community participation. It is a matter of drawing up the right communication strategy based on a sound policy, clear vision, wise content and every one's participation in a celebration - specially the visitors whether on business or leisure.

The education segment can play a major role with support from business establishments, the government and NGOs. The media can do magic in this regard. Print, electronic and of course whisper campaign, which is bigger than the rest. The question is, is it loud enough and worthy of being whispered about? If it is, Karnataka might set an example. Nothing is impossible if we put our heart, mind and brain to it.

The segments of tourism that can benefit from this are adventure tourism, wildlife tourism, eco-tourism, amusement and leisure tourism, cultural tourism, pilgrimage tourism, nature and environmental tourism, village tourism, corporate tourism.

- P K Bhattacharjee
Managing Partner,
Great Bear Promotions
(Promoters of Environmental Science)

Iqbal Mody Executive Director, Global Aviation Services Pvt. Ltd.

IATA plans to introduce domestic BSP in India and the pilot project that it started in May 2005 has helped certain agents to migrate to domestic airlines. It is an excellent proposal because it will bring parity with international BSP in India. It would also be a cost-saving device for both agents and domestic airlines in terms of neutral ticket stocks, sales transmittals and reporting norms.

However, all parameters must be in place before rolling it out in India. It is imperative that the following issues are satisfactorily resolved to the satisfaction of all airlines and agents in India:

• Can there be two BSPs in one country under IATA Resolution 850?
• What is the duration of the Pilot Scheme?
• What mechanism does BSP have towards segregating international and domestic sales when IATA agents are using similar neutral tickets for both segments of traffic?
• What is the guarantee that agents will utilise these tickets only for domestic sales?
• What protection is there for international airlines in case of payment default for international sales?
• Has the current insurance scheme/bank guarantees of these pilot agents been amended to include domestic sales and at what average ticket value?

Domestic BSP manual to IATA agents

BSP has circulated a Domestic BSP Manual (prior cutover) with an addendum to the IATA Passenger Sales Agency Agreement.

• Chapter Number 14 on procurement of Standard Traffic Documents states that:
  • New agents will be entitled to 100 documents per month at the time of cutover into BSP
  • Agents will be entitled to 60 days stock
  • Additional STDs will be made available on payment of the 'net' value per document based on the agent's international billing.
• On what basis has this entitlement of ticket stock and net value on 'International' billing been circulated to agents for domestic BSP?
• Agents under international BSP in India are currently entitled to 90 days ticket stock that they can use in 30 days. Why is there a discrimination in ticket stocks entitlement? While agents under international BSP are entitled to 90 days ticket stock, domestic BSP entitles them only to 60 days ticket stock. While the international BSP allows agents to use it in 30 days, new agents are allowed to use it in 50 days. On the other hand, domestic BSP allows agents to use their stocks in 30 days but the new agents are allowed 100 days.
• Has the initial ticket stock of 35 days given to various agents under the Pilot Scheme been replenished? If yes, how much additional stock has been given and for what duration?

Insurance coverage (domestic)

• What is the insurance coverage for domestic BSP?
• What criteria has been used for calculating the total amount?
• Who will pay the premium, airlines or agents?
• Will one policy cover all airlines?

Has the Penalty Clause of payment of interest towards delayed payments been incorporated in the Insurance Policy Document for implementation whenever required? As per the government IRDA (Insurance Regulatory & Development Authority) regulations, interest for any delayed payments is two per cent above the bank interest rate prevalent at the beginning of the year.