SpiceJet commission cut to boost web sales: Agents body

Travel agents fear other airlines may follow suit

Don't want to miss the best from Business Standard?

Low-cost carrier SpiceJet Ltd has discontinued the annual productivity commission, joining the list of airlines that have reduced agent incentives. Unlike full service airlines, low-cost carriers (LCCs), including SpiceJet, do not pay a regular commission on all ticket sales and also do not give a 15-day credit to agents to remit the sales amount.

Typically, LCCs collect advance deposits from agents releasing inventory worth that amount. The agents are paid one percent deposit incentive and also productivity commission of one to three percent if the agency meets the sales target. SpiceJet has withdrawn the annual productivity commission, leading to a fear among the agents that other airlines too will follow suit.

Air India Ltd and Jet Airways (India) Ltd have reduced commission to one percent, while European airlines do not pay regular commission.

“We feel SpiceJet has withdrawn the incentive because it wants to encourage web sales. It is attempting to consolidate its distribution and a cut in commission will impact smaller agents. We are protesting the move and will take steps like stopping sales of airlines that do not pay incentives to agents,” said Iqbal Mulla, president of the Travel Agents Association of India. Mulla claimed the airline had stopped both the monthly and annual commission payout.

Added an agent: “We have voiced our concern to SpiceJet. It is detrimental to agents. We see it as a cost-cutting exercise and may lead to a precedent with other airlines following suit.”  

SpiceJet did not respond to an email query seeking comments. A source close to SpiceJet denied the move was a cost-saving exercise and said the airline was planning to consolidate the commission scheme to make it more rewarding to agents. “They (agents) are our partners. We have only withdrawn the annual commission and the monthly scheme is still in place,” the source said.

SpiceJet has about 20 per cent market share in domestic airlines. Last month, it created the landmark of carrying 55 million passengers since its launch in 2005. It operates 350 daily flights to 45 domestic and eight  international destinations.