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Author:Devesh Agarwal
Director at Infomart
Director at Infomart
Travel Agents must learn to live with 0% commission
From October 1, 2008, airlines in
India are going to stop paying commissions on their tickets sales by
travel agents.
Travel agents are understandably incensed. Until about a year ago they used to earn 9% commission, which was dropped to 5%, and in another 2 months, will drop to 0.
Industry experts say most small agents will shut shop, while the bigger ones will earn special bonuses, instead of commission, from airlines, which will get increased, even further, thanks to the smaller agents closing down.
The various travel agents' associations, whose members account for 85% of tickets sold, have threatened to stop selling air tickets, which will impact the Rs. 33,000 Crore airline industry in India.
For many smart customers, travel agents were already operating in the Zero Commission regime, since we would take back the commission, in the form of discounts.
Painful as it is, it is time for travel agents in India, to start walking the extra mile to earn their commissions. As a customer I do not need to pay 5% to a travel agent to just do an online booking that I can do myself. In most mature markets, travel agents receive no commission from the airline, and charge service fees, which demands the provision of value addded services.
For many years, I have been telling my travel agent friends that they need to provide services commensurate with their commissions. Start providing holistic travel related services. Hotels, car rentals, visa and passport services, travel insurance, travel advice, and tours, are just some of the areas they must look at.
Online travel agents, such as Ezeego1.com, Cleartrip.com, Yatra.com and Makemytrip.com have already started finding alternative sources of revenue. Some these agents have less than 30% of their total revenues coming from airline bookings.
Agents who develop skills and offer services that help the customer find better deals, and an easier travel experience, will survive, others will just disappear in to history.
Visit my aviation blog
Travel agents are understandably incensed. Until about a year ago they used to earn 9% commission, which was dropped to 5%, and in another 2 months, will drop to 0.
Industry experts say most small agents will shut shop, while the bigger ones will earn special bonuses, instead of commission, from airlines, which will get increased, even further, thanks to the smaller agents closing down.
The various travel agents' associations, whose members account for 85% of tickets sold, have threatened to stop selling air tickets, which will impact the Rs. 33,000 Crore airline industry in India.
For many smart customers, travel agents were already operating in the Zero Commission regime, since we would take back the commission, in the form of discounts.
Painful as it is, it is time for travel agents in India, to start walking the extra mile to earn their commissions. As a customer I do not need to pay 5% to a travel agent to just do an online booking that I can do myself. In most mature markets, travel agents receive no commission from the airline, and charge service fees, which demands the provision of value addded services.
For many years, I have been telling my travel agent friends that they need to provide services commensurate with their commissions. Start providing holistic travel related services. Hotels, car rentals, visa and passport services, travel insurance, travel advice, and tours, are just some of the areas they must look at.
Online travel agents, such as Ezeego1.com, Cleartrip.com, Yatra.com and Makemytrip.com have already started finding alternative sources of revenue. Some these agents have less than 30% of their total revenues coming from airline bookings.
Agents who develop skills and offer services that help the customer find better deals, and an easier travel experience, will survive, others will just disappear in to history.
Visit my aviation blog
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