Industry predicting mass closures if zero commission goes ahead
Wednesday, 13 August 2008: As the battle between airlines and Indian travel agents continue, the industry is now predicting mass closures if a zero commission model is implemented in a few months.
Talks between airlines and travel agent associations have been ongoing, and so far the two parties have reached a one-month postponement of implementation between the three major carriers of Air India, Jet Airways and Kingfisher Airlines.
But it appears the industry isn’t happy with the results, with a spokesperson for the Travel Agents Association of India (TAAI), declaring, “After giving all the reasons why zero commission is not a good idea and highlighting that the airlines’ were not well prepared to accept a new system, all they do is defer it by a month.”
Agents requested for the postponement to be stretched until the 1st of May, 2009.
Now some industry representatives are predicting that if the implementation of zero commission takes place so soon, some 80% of travel agents could face closure.
They claim while some countries may benefit from the streamlining of the selling process, in India 85-90% of air tickets are still sold through travel agents.
In ‘mature’ online markets like the US, where there is also a zero commission policy, it is estimated that 98% of airfares are bought using credit cards, whereas in India only 9% are bought using credit, meaning travel agents are still very much needed to collect fares.