Thai Airways cuts travel agents' commission

Within days of a travel agents’ meeting with the Directorate General of Civil Aviation (DGCA), which resulted in the latter demanding clarifications from 14 foreign airlines, Thai Airways has cut the commission payable to travel agents from 5 per cent to 3 per cent.

In a letter issued to travel agents across the country, Thai Airways has said that “...from 16th June, 2009, the IATA’s commission shall be changed from 5 per cent to 3 per cent. Both the Basic Fare and ‘Q’ Surcharge are commissionable.”

‘Q’ surcharge stands for the current fuel/insurance surcharge and the service charge. Earlier, only the basic fare was commissionable and not the surcharge.

But now, the airline is trying to make the reduction even in commission by making both the basic fare and surcharge commissionable. This will be applicable to all tickets issued or reissued on or after June 16, 2009.

On Wednesday, the DGCA had asked foreign airlines to explain why they have not been giving commission or remuneration to travel agents. The regulator issued letters to 14 foreign airlines and gave them a time period of 10 days to come up with the reasons.

The decision was the outcome of a meeting between the travel fraternity bodies — such as TAAI, TAFI, IAAI, IATO, ADTOI and ETAA — and the DGCA in Delhi.

Most airlines stopped paying the 5 per cent commission from November, forcing agents to shift to a fixed transaction fee on every ticket purchased. However, the fixed transaction fee, which was in the range of Rs 350-2,500 a ticket, depending on the class and routes, had also been discontinued from December.

Later, all the domestic carriers including Jet Airways, Kingfisher and Air India agreed to pay a 3 per cent commission to travel agents. However, foreign airlines did not restore the commission, nor the transaction fee.

According to travel agents, a 5-7 per cent commission from foreign carriers is reasonable. Compared to domestic flights, travel agents, in the case of international airlines, have to provide extra services related to passports, visas and foreign currency.

“We are waiting for the foreign airlines to respond to the DGCA’s letter demanding clarifications. After that we will take it forward. We want 5-7 per cent commission for the agents,” Shahrukh Kapadia, chairman-Airline Council, TAAI told Business Standard in a reaction to the letter.