Business Standard: Calling the airlines bluff

Read a nice article by Anjuli Bhargava in the Business Standard today, about the airlines' ticket prices, the fuel prices, and the politicians. I strongly recommend your reading it.

Ms. Bhargava asks

Can someone enlighten me as to what’s going on? I am referring to this quid pro quo that’s been playing out through the media between the airline industry, the aviation ministry and the government.

Sure I can Ms. Bhargava. We consumers are being taken for a ride. I have written how.

• Click here for all articles about the fuel prices.
  

• Click here for all article about the zero commission issue.
  

• For an analysis on the current crisis in Indian aviation click here.
  

Talking of the zero commission issue. The travel agents have become smart. They have decided to target the airlines one at a time. From yesterday, travel agent, including the online agents, have stopped issuing Jet Airways or JetLite tickets. To ensure maximum impact on Jet, and continued income for themselves, the agents will continue to issue Kingfisher and Air India tickets. Within a week they expect Jet to soften its stand. Then they will go after Kingfisher, and on and on, one airline at a time.

What is the fight all about. Very simple.

Till November 1, all full service airlines used to pay travel agents a 5% commission on the basic fare. This was built in to the cost of the ticket. If you or me, went direct to the airlines' websites and bought the ticket, the airline kept the 5% commission for itself.

On November 1, the airlines stopped the commission and told agents to start charging a "transaction fee" ranging from Rs. 350 to Rs. 10,000, per transaction. The agents are willing to do that, but expect the airlines to charge the same transaction fee from direct customers who go to the airline office or website, so that a price parity is maintained.

The airlines are unwilling to do that. Now that the costs are out in the open, we customers have started complaining. Herein lies the crux of the matter.

It may not be $700 billion as for Wall Street, but we customers are being called on to bail out both the airlines and the travel agents.

And just as a reminder, the fee is per TRANSACTION. i.e. if you change your ticket, or even cancel your ticket, you have to pay the fee again, and again, and again.