Kingfisher restores travel agent commissions

As I had indicated in my earlier story, Kingfisher Airlines announced that it will pay three per cent agency commission to travel agents on gross fare, effective from today. The decision to pay three per cent commission was acknowledged in a fax sent to TAAI office last night. “The airline has also withdrawn Transaction Fee on tickets, which was introduced following the abolition of five per cent commission to travel agents on October 31, 2008,” stated an airline official. Current market conditions and the boycott threat by travel agents are believed to be the two main reasons for the airline agreeing to pay three per cent agency commission.

Earlier, Jet Airways had announced that it will be offering three per cent commission to travel agents on gross fare. The decision came after travel agents boycotted sales of Jet Airways and its Low-Cost Carrier (LCC) JetLite’s tickets from December 4, 2008. Industry sources informed that the daily sales of Jet Airways and JetLite’s tickets had dropped by 50 per cent, from nearly Rs 18 crore to Rs nine crore, after the boycott by travel agents.

Now the travel agents will target the foreign carriers, using the same, “one-at-a-time” approach. Only 60 of the the approximate 260-70 IATA carriers globally, service India. Of this 60, only 16 airlines have taken the decision to move to the zero commission regime. It is just a matter of time, before they too will revert back to a commission based regime.

I must compliment the travel agents’ associations. They have executed a masterful strategy to perfection with superb effectiveness. They have managed to achieve in India the results, only their fellow Japanese agents have managed before; i.e. to reverse the airline’s decision on commission structures. In no other country, have travel agents achieved this result.

The recent development of airlines reversing their decision on zero commissions (ie, Jet and Kingfisher) implemented in November 2008 is a huge victory for the travel agent fraternity. The current agreement of 3% is a boost for agents. Previously they earned 5% on only the basic fare. Now, they will earn 3% on the gross fare, which includes fuel surcharges, which are among the highest components in the total airfare.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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