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Airline’s cuts transaction fees pushing travel agents and online portals out of business

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Airlines in India are cutting transaction fees, commission and even fares to boost air travel. This move comes after Praful Patel’s call to reduce fares citing the cheaper aviation fuel. The move was done in a strategic fashion.

First, the 5% commission given to the travel agents (online portals, travel agents) was cut. To balance this the agents were allowed to charge a flat fee of 350 rupees on domestic tickets and up to 10000 on international tickets as a transaction fee. This has countered the loss to some extent for the travel agents. The airlines were also selling the tickets from their website’s and charging the transaction fee.

In the recent move by the airline’s which is almost a cartel, the commission charged on the domestic and international tickets was removed, for tickets bought on their respective portals, call centers or offices.

What does this mean to the travel agents? They can continue to charge the transaction fee and continue to make money. The problem is, when the customer realizes that the same ticket can be bought from Kingfisher or Air India’s website for 350 rupees less, the drift will start. Another option is they can charge a lesser transaction fee and stay afloat or close the shop altogether. I am sure transaction fee or the commission was a major chunk of their revenues.

Who are affected? All the offline ticket booking agents. All the online travel portals like : Yatra, Makemytrip and Arzoo.com

It is not that black and white a situation. India is not that sophisticated as far as booking on the Internet goes. Which means, the airlines still get a major chunk of their ticket bookings from the travel agents. Its a lose-lose situation for both the airlines and the travel agents.

It would be interesting to see if a win-win solution can be arrived at.

What do you think the online travel portals will do?

  1. asdf says

    its only a loose loose situation for the travel agents…thats what i think…this is the situation in the usa…and everything seems to be fine

  2. Rajeev says

    Hi
    How online travel portal will do in this situation. I think Online Travel Portal will provide complete travel packages like trasport to airport from traveller’s home/hotel, air tickets, Hotel booking, sight seeing etc. These value add services will help portal to attract travellers.

    I think now airlines will have affliate programs for different website publishers. This will help airlines to cut commissions.

    Thanks,
    Rajeev
    http://www.brandsindiaonline.com

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