Travel agents, airlines at odds

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Travel agents fear that the move by airlines to fix the commission rate is a prelude to the introduction of the ‘transaction fee’ system

SANGAM PRASAIN

KATHMANDU, DEC 22 -

While airlines continue to call travel agents an integral part of their business, the agents are increasingly feeling they are not getting their due. The recent move by private carriers to fix the commission rates for travel agents has increased the distance between the two.

Buddha Air, Yeti Airlines, Guna Air and Agni Air have set the agent commission at its upper limit since Dec. 1. Airlines are considering fixing the commission at the upper limit of 12 percent for tickets sold in US dollars and 9 percent for tickets sold in local currency.

However, the commission on Buddha Air tickets has been fixed at 7 percent and on Yeti Airlines tickets at 11 percent. Earlier, travel agents pocketed a commission of 65 percent on tickets sold in US dollars and 15-20 percent on tickets sold in local currency. Although the commission had been set at 15-20 percent, travel agents were found to be raising their cut to as high as 55 percent when tickets were scarce.

Travel agents said that reducing the agency commission would not improve the airlines’ finance. “All the airlines do not have similar operational costs and markets, and the move to fix the commission is cartelling,” a travel agent said. Travellers and agencies fear that the standardised airfare policy would mean the end of competition among airlines regarding fares.

Although tourism associations have decided to adopt a “win-win situation” in response to the move, airlines said that they had been compelled to do so to stop uncontrolled overcharging by travel agents.

“We are discussing the proposal of travel agents regarding their concern on the cap on commissions, however, a decision is yet to be made,” said Prajwol Thapa, marketing manager of Guna Air.

A joint meeting of the Nepal Association of Tour Operators (NATO), the Trekking Agents Association of Nepal (TAAN) and the Nepal Association of Tour and Travel Agents (NATTA) recently decided to forward a proposal to create a win-win situation regarding commissions. However, they said that the airlines had not called them for a meeting yet.

These travel trade associations had requested the airlines to maintain the previous commission rate until December 2011 as changes in the commission and airfares would result in massive losses to tour and travel operators. “Travel agents are at loggerheads with airlines over the issue as the carriers have said that they would not change their decision,” said a travel agent.

Travel agents fear that the move by airlines to fix the commission rate is a prelude to the introduction of the “transaction fee” system where agents would charge their customers directly for services rendered and carriers would stop paying a commission altogether. While airlines claim that these are cost-cutting measures to help them get through the current economic situation, the agents are unhappy with their decision.

Recently, four private carriers had implemented uniform fares for flights between Kathmandu and Pokhara, Biratnagar, Bhairahawa, Nepalgunj, Bhadrapur and Dhangadhi. The fares have been adjusted to match Buddha Air’s tariff. The differences in ticket prices range from Rs 50 to Rs 300