100 days after commencement, the standoff between Singapore Airlines and travel agents has moved to a different plane. Over 1000 agents across the country have dealt a huge blow to the distribution network and sales of the airline in India by voluntarily relinquishing their authority to issue tickets on the airline enmasse in protest against the airlines adamant attitude in not wishing to discuss agent remuneration.
Since 29 Dec 2008 travel agents across the country had voluntarily suspended sales on Singapore Airlines to register their protest against the unilateral action by the airline to abolish their remuneration for services rendered by the agents. This action signals a hardening of stance by the agents who refuse to offer services to the airlines for free, especially in these recessionary times. It is a landmark decision which signifies unity among agents associations across the country jointly fighting for their rights.
“How can any business survive without remuneration?” is the question agents are asking the airline.
In response to Singapore Airlines intention to do away with agents Pradip Lulla, president of the Travel Agents Federation of India, one of the six associations who have joined hands to fight the battle says “Every business survives and thrives on the strength of its distribution network. Show me one single business where the principals refuse to remunerate their agents, especially when the agents sell 90 percent of their inventory.”
Air India, Jet Airways and Kingfisher Airlines had also announced last November that they would not pay travel agents a commission. However, within four days of their announcement, and in consultation with the agent associations, the standoff was resolved and the Indian carriers agreed to reinstate agency commission, albeit at the lower level of 3 percent as compared to the earlier 5 percent, keeping in mind the value of the travel agents’ distribution network.
Singapore Airlines admits the importance of agents yet remains adamant and insists that agents should charge a “Transaction Fee” to clients, over and above the airline’s published fares to get their remuneration. This contradicts the agents’ contention that it should be the airline who remunerates them for services rendered to the airline – not the passenger. Agents aver that the existing agreement between them and the airlines clearly mandates remuneration for services rendered to the airlines. These agreements are between airlines and agents and should not be misconstrued to charge the passenger, they maintain. The relationship between agents and passengers is independent of their contract with the airlines and is a matter of mutual consent.
“Maybe Singapore Airlines needs to be educated on the concept of MRP (Maximum Retail Price) in India,” responds Ajay Prakash, national general secretary of TAFI. “How can they ask us to charge the passenger a price greater than their published fare? Not only does it make the ticket more expensive for the passenger, but it’s also illegal,” he added.
There are 2876 IATA accredited agents in India out of whom only 1300 are currently authorized to issue tickets on SQ. They in turn supply tickets to close to 50,000 non-IATA agents across the country. “The bulk of agency revenues come from airline commissions and the livelihood of 10 lakh people is at stake if all airlines abolish commission” states Mr. Rajji Rai, president of the Travel Agents Association of India.
Accordingly, over 1000 IATA agents across the country have last evening (09 April) submitted letters to the Managers of Singapore Airlines all over India, relinquishing their ability to issue tickets on Singapore Airlines until they agree to compensate them for their services. “Agents will only distribute and service airlines who fairly remunerate them for their services” says Vasuki Sundaram, chairperson Western India Chapter TAFI.
This a serious body blow to the Asian carrier since never before in the history of civil aviation have so many agents voluntarily given up their ability to ticket something they would aspire to in other times and would indeed importune airlines to give them ticketing authority.
Close to 800,00 Indians visited Singapore last year, the biggest market by far for Singapore Airlines in the world. Indians were the fourth largest contributors to the Singapore economy. If Singapore Airlines fails to appreciate the importance of Indians, it only stands to lose their patronage. Agents are questioning the step motherly treatment meted out to the Indian market – for whilst Singapore Airlines continues to pay commission in a number of countries like Japan, China, Korea and Australia whose contribution to the Singapore economy and Singapore Airlines cannot be equated with India’s contribution, it intends to deny Indian agents a similar remuneration. “What is the justification?” ask Indian travel agents. To this, Singapore Airlines has no proper response.
This is the first time in the history of Indian aviation that the entire trade has come together to voluntarily relinquish their ticketing ability on an airline. The Travel Agents Federation of India (TAFI), the Travel Agents Association of India (TAAI), the IATA Agents Association of India (IAAI), the Indian Association of Tour Operators (IATO), the Association of Domestic Tour Operators in India (ADTOI) and the Enterprising Travel Agents Association (ETAA) are jointly representing their members and the entire Indian travel agents fraternity.