As cash-strapped airlines cut commissions on tickets and travellers prefer the ease of booking tickets online, many travel agents are convinced their occupation is a “dying trade”. With business and margins shrinking, many are diversifying into allied segments such as hotel and taxi bookings, and travel packages.
“In the past one decade,
margins have shrunk three per cent from nine per cent. Also, a number of newer booking avenues have opened up. The situation is bad and if this continues, we could see many agents shutting shop,” said Iqbal Mulla, President, Travel Agents Association of India (TAAI). In fact, while domestic airlines are offering a three per cent commission on the basic fare, commissions on foreign flights have almost dried up. Most foreign carriers do not offer any commission to these agents, except a few carriers from the Middle-East, according to a report by Amritha Pillai in DNA. This has forced the agents to ensure margins out of the three per cent commission and service charges from customers. Most travel agents said customers are also not willing to pay higher service charges. What’s more, cost-cutting airlines have also stopped fringe benefits such as sending calendars and hosting parties for agents, said a Jaipur-based travel agent. All this has made standalone air-ticketing business unviable. “The travel trade, as far as ticketing is concerned, is a dying trade. I don’t see a next generation of standalone air-ticket travel agents,” said Ramesh Bhatia, an agent from Jalandhar who solely sells air tickets. Bhatia is looking to gradually diversify into other travel segments and believes others of his ilk will follow suit, sooner or later. Manoj Sogani, Managing Director, BCS Tours and Travels from Jaipur, has in fact made the switch already. “I diversified into hotel booking, taxi booking and other packages five to seven years ago,” he said. To address these issues, TAAI recently held a meeting of travel agents in Mumbai. One of the main issues discussed was of airlines planning to reduce credit window for agents to a week from the current 15 days from June. “We will request airlines to extend the fortnightly credit facility even after June. Almost 80 per cent of the agents believe it would be difficult to continue air ticketing if the facility is reduced to a week,” said Mulla. Travel agents say the reduction in commissions is ironical as about 80-85 per cent of bookings are still done through agents. They also rue that airlines are supporting consolidation in the industry. While they pay three per cent commission to travel agents, airlines are willing to offer higher incentives to wholesalers, which are typically portals such as Makemytrip.com and Yatra.com. Backed by strong funding, these portals pre-purchase tickets, which helps them offer huge discounts to fliers later — discounts travel agents cannot match. “The airlines are favouring bigger players like the portals. However, they fail to realise that in the long run, this will make a handful of players stronger, who may dictate commissions to airlines,” said N G Shankar, Director, Durga World Travels. But some travel agents, like Shankar, have been able to hold on to their margins and clientele. “Mine is not a volume-based business. I deal with high net-worth individuals, corporates or other customers who value time and service over money. Offering a full-fledged package and not sole ticketing helps me make better margins,” he said. Others are making the most of the current turmoil in the domestic airline industry. Cash-strapped Kingfisher Airlines, for one, is offering higher incentives to attract customers. “They are willing to offer commissions in the range of five per cent to six per cent. But agents are booking only for the next 10-15 days with them,” said the travel agent from Jaipur.
Click here to see the original article>margins have shrunk three per cent from nine per cent. Also, a number of newer booking avenues have opened up. The situation is bad and if this continues, we could see many agents shutting shop,” said Iqbal Mulla, President, Travel Agents Association of India (TAAI). In fact, while domestic airlines are offering a three per cent commission on the basic fare, commissions on foreign flights have almost dried up. Most foreign carriers do not offer any commission to these agents, except a few carriers from the Middle-East, according to a report by Amritha Pillai in DNA. This has forced the agents to ensure margins out of the three per cent commission and service charges from customers. Most travel agents said customers are also not willing to pay higher service charges. What’s more, cost-cutting airlines have also stopped fringe benefits such as sending calendars and hosting parties for agents, said a Jaipur-based travel agent. All this has made standalone air-ticketing business unviable. “The travel trade, as far as ticketing is concerned, is a dying trade. I don’t see a next generation of standalone air-ticket travel agents,” said Ramesh Bhatia, an agent from Jalandhar who solely sells air tickets. Bhatia is looking to gradually diversify into other travel segments and believes others of his ilk will follow suit, sooner or later. Manoj Sogani, Managing Director, BCS Tours and Travels from Jaipur, has in fact made the switch already. “I diversified into hotel booking, taxi booking and other packages five to seven years ago,” he said. To address these issues, TAAI recently held a meeting of travel agents in Mumbai. One of the main issues discussed was of airlines planning to reduce credit window for agents to a week from the current 15 days from June. “We will request airlines to extend the fortnightly credit facility even after June. Almost 80 per cent of the agents believe it would be difficult to continue air ticketing if the facility is reduced to a week,” said Mulla. Travel agents say the reduction in commissions is ironical as about 80-85 per cent of bookings are still done through agents. They also rue that airlines are supporting consolidation in the industry. While they pay three per cent commission to travel agents, airlines are willing to offer higher incentives to wholesalers, which are typically portals such as Makemytrip.com and Yatra.com. Backed by strong funding, these portals pre-purchase tickets, which helps them offer huge discounts to fliers later — discounts travel agents cannot match. “The airlines are favouring bigger players like the portals. However, they fail to realise that in the long run, this will make a handful of players stronger, who may dictate commissions to airlines,” said N G Shankar, Director, Durga World Travels. But some travel agents, like Shankar, have been able to hold on to their margins and clientele. “Mine is not a volume-based business. I deal with high net-worth individuals, corporates or other customers who value time and service over money. Offering a full-fledged package and not sole ticketing helps me make better margins,” he said. Others are making the most of the current turmoil in the domestic airline industry. Cash-strapped Kingfisher Airlines, for one, is offering higher incentives to attract customers. “They are willing to offer commissions in the range of five per cent to six per cent. But agents are booking only for the next 10-15 days with them,” said the travel agent from Jaipur.