Scamster makes 389% profit margin selling official travel tickets to Members of Parliament

by Devesh Agarwal

A ticket bought for Rs. 17,270 was sold to the Rajya Sabha secretariat for Rs. 67,270, a 389% mark-up!!

We regularly hear either the Minister of Civil Aviation, Mr. Ajit Singh, or the Director General of Civil Aviation, Mr. Mishra, calling for airlines to curb their fares and not indulge in price gouging.

One has to wonder what will be their reaction to this news report by Saurabh Sinha in the Times of India. The Rajya Sabha (the upper house of the Indian parliament) secretariat was informed of a potential scam when a RS Member of Parliament (MP) found some extreme prices on his air ticket and lodged a formal complaint.

The secretariat paid Rs 99,292 for a one-way Delhi-Chennai flight on Jet Airways for Ashk Ali Tak, a Congress RS member from Rajasthan. A Chennai-Hyderabad ticket on Air India was bought for Rs 35,184. A Hyderabad-Bangalore journey on Jet and a Bangalore-Jaipur ticket on low cost IndiGo 'cost' Rs 67,270 and Rs 17,270, respectively.

The DGCA, on investigating with the various airlines, found

"Jet Airways said it got Rs 39,292 from the agent for the Delhi-Chennai ticket which was sold to the RS Secretariat by the latter for a whopping for Rs 99,292; and Rs 17,270 for the Hyderabad-Bangalore ticket that was 'bought' for Rs 67,270. AI said it got Rs 4,484 for the Chennai-Hyderabad ticket which was bought for Rs 35,184. IndiGo said it got Rs 8,910 for the Bangalore-Jaipur ticket that was bought for Rs 38,410,"

A 300% mark-up!!! on business class fares? All on the tax-payers' Rupees??

Why is the Government going to private ticket agents, when it has a fully owned and well functioning on-line travel agent (OTA) called Indian Railway Catering and Tourism Corporation (IRCTC), which also sells flight tickets?

And while we are on the question of fares, why is the RS MP flying Business Class on yours and my Rupees? That too at a time of the government raising prices and taxes to improve its collections?

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Opinion: Travel agents to charge service fee. A smart move, but they will have to earn it.

As domestic full service carriers like Air India and Jet Airways are cutting back on their commissions, travel agents in India have decided to charge a service charge of Rs 225 from July 16 on tickets of full service carriers, issued by them.

In this age of skyrocketing expenses, airlines are desperately trying to curtail costs. Ticket distribution and sales is a major portion. As per its annual report, Jet Airways indicates ticket distribution and sales costs are Rs. 1,261 crore (Rs. 1.25 billion) or about 10% of its annual expenditure. Air India is estimated to spend about Rs. 1,000 crore or 6%.

Full service domestic carriers have been paying travel agents 3% commission. Many international carriers like Air France-KLM, British Airways, Singapore Airlines, and Lufthansa pay none, while Emirates, Qatar, Etihad, Cathay Pacific, Gulf Air and Sri Lankan Airlines pay from 1% to 5%, but even these airlines are heading towards the zero commission regime.

Free image courtesy of FreeDigitalPhotos.net

Customers are increasingly demanding better value for their money spent. In these hard economic times, my customers are demanding that I cut costs, improve service, and be available to them when they need me. In return I am guaranteed only an opportunity to do business, not the business itself.

Travel agents cannot depend on their age old defence that they are entitled to a commission on tickets they sell.

Any entity in business or service, survives only on the value they add in the supply chain. The day someone or something else improves the value chain, existing links will be re-aligned. Who amongst us, dear readers, will not welcome a 3% reduction in airfare in lieu of the commission airlines pay the agents?

Over the years, technology has caught up with the agents. Today, customers are perusing the internet and obtaining the best value for their money. For a routine trip with minimal support services the internet is convenient. However, travel if anything, is not routine. For long I have propagated, that travel agents must start earning their incomes and not remain air-ticket churning machines, who are being easily replaceded by an internet search engine.

Travel agents in India will be well advised to read what my friend, Brett Synder, The Cranky Flier offers -- a travel concierge. They need to start offering genuine help services to their customers when their customers need it, and wherever they need it.

A dear friend, who also happens to be a dynamic travel agent, gave up many corporate clients who were non-remunerative and has started offering improved and diversified, travel related services, to individuals willing to pay it, and is thriving. I am waiting for him to take it up a notch and become a true travel concierge.

The imposition of the Rs. 225 service fee is a smart move by the travel agent fraternity in India. It is along the model followed in most parts of the world and afford customers the choice of paying the agent, or going directly online to the airlines' websites.

One has to gauge the impact on online travel agents (OTAs) like Travelocity, MakeMyTrip, Yatra and others, who will need to work very hard to differentiate themselves, given the fact that they use, and therefore offer, a very similar front end to airline websites, complete with the restrictions, like for example on complex routings etc.

For these types of tickets passengers would be well advised to go to their friendly neighbourhood agent.

Share your thoughts on the travel agents' commissions, their future, and what they need to be doing. Post a comment.

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Mobile phones popularise use of self check-in facilities at Mumbai airport

The growing popularity of web, kiosk and mobile check-in has almost doubled passenger self-service check-in at Chhatrapati Shivaji International Airport (CSIA), Mumbai over the year, up from 36% to 65%.

The 2011 SITA/Air Transport World Passenger Self-Service Survey found that the web check-in rate was higher in Mumbai than at any of the other airports included in the survey. 70% of Mumbai passengers said they use it occasionally or frequently compared to a global average of 65%. The survey also showed that the mobile phone is now an integral part of the passenger experience in India.

The survey was carried out at Abu Dhabi International Airport, Beijing Capital International Airport, Frankfurt International Airport, São Paulo Guarulhos International Airport and Chhatrapati Shivaji International Airport, Mumbai, which serve about 283 million passenger a year.

98% of all passengers carry either a cell phone (56%) or a smartphone (42%). The most popular smartphone is the Blackberry at 48% (all you iPhone and Android only app-writers please tattoo this to your eyelids). Smartphones are most popular with 66% of first/business class passengers and 44% of frequent flyers (who take ten or more trips per year).

Smartphone passengers are driving demand for self-service options and Wi-Fi access at airports. 80% of passengers, globally, want free Wi-Fi access (hello airport operators), but 38% of Mumbai smartphone passengers would accept paying for access compared to 10% globally, though we are sure, this number would dive if the amount is more than a few rupees.

Unlike the developed world, and with 56% of passengers carrying a non-smart mobile phone, India still shows a high demand for SMS notifications of flight information. 48% of passengers already receive SMS notifications and a further 46% would like to receive them.


At 63%, online booking was the most popular form of booking among Mumbai passengers compared to a global rate of 57%. Online travel agencies like Yatra.com, MakeMyTrip.com, Travelocity.com, Cleartrip.com, etc., were used by 59% of those who booked online. Airline websites accounted for 34%. May be passengers need to get more familiar with IXIGO.


Airport operator Mumbai International Airport Pvt. Ltd., (MIAL) will be increasing the use of Common Use Self Service (CUSS) terminals. As per Mr Vikram Sethi, Vice President and Head of Terminal Operations, "There will be a further increase in offsite check-in/self check-in as the government requirement for airlines to stamp boarding cards generated from kiosks is being discontinued and airlines will have to conduct identity checks at the boarding gate."

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Singapore Airlines slashes fares from India

Singapore Airlines has announced a new low fare sale from India to select destinations in South East Asia and Australia.

As per the ad in today's Times of India, Bangalore edition, the fares round-trip ex-Bangalore to Singapore is INR 16,830, Denpasar/Bali/Kuala Lumpur/Penang/Langkawi/Kuching/Bangkok INR 23,980, Sydney/Perth/Brisbane/Melbourne/Adelaide INR 41,350. These include taxes and surcharges.

Fares are for economy class travel. Tickets must be purchased by January 15, 2009 and will be valid for travel from December 29, 2008 to March 31, 2009 for Singapore and South-East Asia and from February 01, 2009 to June 30, 2009 for the Australian destinations.

Similar offers are available from other Singapore Airlines cities in India.

One can also expect SQ's competitors, Malaysia Airlines, Thai Airways, and Jet Airways, to follow suit.

Since the travel agents' boycott of Singapore Airlines commences today, I recommend Bangalore Aviation readers to visit the Singapore Airline website.

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oneworld first to sell round-the-world fares on-line

oneworld, the global airline alliance, claims to have become the first to launch a new internet booking tool to allow purchasing of multi-airline round-the-world air tickets.

The oneworld Explorer fare tool is available on the Oneworld website, making the airline alliance the first alliance to offer public fares for sale on the internet. All oneworld member airlines will also provide links to the booking tool on their separate websites.

Choosing from ten member airlines and 20 affiliates, customers and travel agents will be able to plan and book a round-the-world itinerary and pay for tickets online. Availability of flights and seats on dates selected will automatically be checked when customers click on destinations on an interactive map. The system then validates the chosen itinerary, making sure that it meets all the fare’s rules and conditions, before immediately issuing a price for the selected journey. Oneworld Explorer calculates its price based on the number of continents visited rather than the mileage flown. Itineraries can be up to 16 sectors, and when finalised, customers just have to pay online and print out the details whilst the e-tickets are sent to their email.

For more information visit here

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The age of zero commission and zero guarantees

The "Zero Commision" ruckus has been ratcheted up another step, by the travel agents. As per various news reports,

In a move aimed at forcing airlines to revoke their decision to withdraw the five per cent commission, previously built-in to the ticket prices, and paid to the travel agents, over 2,500 travel companies, including IATA travel agents and online travel agencies (OTAs) like Makemytrip, Cleartrip, Yatra and Ezeego, have decided to stop selling Jet Airways and Jetlite tickets from December 4.

The Jet decision was taken at a meeting of the six associations — Travel Agents Federation of India (TAFI), Travel Agents Association of India (TAAI), IATA Agents Association of India (IAAI), Indian Association of Tour Operators (IATO), Association of Domestic Tour Operators in India (ADTOI) and Enterprising Travel Association of India (ETAA) — which cumulatively account for nearly all of the 2,800 IATA agencies, apart from numerous OTAs.

A previous decision by the agents to boycott Kingfisher Airlines and Kingfisher Red, was withdrawn at the last minute.

The three Indian full service airlines and several international carriers stopped paying 5 per cent commission on the ticket prices to travel agents from November 1. The agencies have had around 10 meetings with airlines to make them withdraw their decision but that has not worked. The airlines, in turn, have asked the agents to levy a transaction fee of Rs 350-10,000 per ticket in lieu of the commission.

Like it or not, we are living in an age of "zero guarantees".

Customers are increasingly demanding better value for their money spent. In these hard economic times, my customers are demanding that I cut costs, improve service, and be available to them when they need me. In return I am guaranteed nothing. Just an opportunity to do business, not even the business itself, just the opportunity.

Any entity in business, survives only on the value they add in the supply chain. The day someone or somthing else can improve the value chain, existing links will be re-aligned. It applies equally to professional relationships as products. An employer looses employees the moment the value chain is superseded by another, and vice-versa.

If anything, I am incensed at the airlines, for not lowering their fares by the 5% commission they used to pay the travel agents. In effect, a fare increase has been hoisted on us.

These actions of the travel agents are based on one flawed fundamental premise -- that have the god given right to be protected from the changing business environment.

Over the years, technology has caught up with the agents. Today, customers, are perusing the internet, making phone calls, and obtaining the best value for my money. During this time, most travel agents became air-ticket churning machines, falling in to complacency and sloth, showing an amazing lack of business foresight that borders on outright incompetence.

Most did not bother to live up to their name TRAVEL agents. Air passengers constitute less than 1% of the total passengers who TRAVEL everyday -- in trains, buses, hotels, taxis, and yes, even planes.

As a passenger, I used to call my favourite airline, Singapore Airlines, directly. Choose the routing and make the booking, seating, meals, etc., myself. When all was done, my travel agent would be called in to issue my ticket. I used to take back all but 0.5% of the commission they earned, as a discount.

Corporate customers, are no different. They take discounts in the form of lines of credit, free airline tickets, and other such incentives.

In effect, travel agents were already operating in a "zero commission" regime. The recent actions of the airlines have only formalised the reality.

Despite my suggestions to the contrary, my travel agent never bothered to diversify in to other services. As a passenger, I need to get visas, health and travel insurance, car transportation, hotel accomodation, and a whole host of other allied services. Services for which I would gladly pay for.

As customers today, the same travel agent will gladly squeeze the last drop of blood from his supplier of copier or printer paper, tea/coffee, or other office needs. Do they guarantee the business and survival of their vendor ?

My local bookstore is not insulated from competition by Amazon or Barnes and Noble online, and should Penguin, MacMillan, or any of the other publishers start selling their books online, no one has guaranteed the survival of Amazon or any other sales channel. Similarly, my newspaper vendor is not guaranteed his livelyhood by the numerous newspapers who now publish e-papers for all to read on the internet.

I know that the age of zero commission will hurt many travel agencies, and many of them will perish, but I remind them, the horse buggy perished in the face of the car, and we have a stronger transport system, the ocean liners perished in the face of the inter-continental airplanes, and they adapted and improved.

These travel agents are smart people, and there are opportunities galore, both within and outside the air and travel sector.

I do not know if I would call everything happening today, progress, but it is reality. As much as I do not like saying it, the faster the travel agents face the situation, the better off they will be.

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India's new cheap travel search launched

CompareSasta.com is the newest entrant in the online travel search market, and has started its service by offering a comprehensive real-time price information of flights and bus travel in India.

CompareSasta.com is trying to be India's leading price comparison website by enabling consumers to search, find, and compare a complete range of products and services best suited to their requirements.

CompareSasta.com users will benefit from choosing and comparing from hundreds of flight options with all available real-time price and itinerary combinations, as well as results displayed according to relevancy.

I did a sample check on flights between Bangalore and Delhi and was impressed by the results, as well as the filters and options available.

“For Indian travellers who prefer to be price conscious, this site will offer a compelling value proposition. The users will be able to search for the cheapest fares online, regardless of where they're based” said Mr. H. Tanna, Director – Operations, ES Group India.

When asked how CompareSasta.com will differentiate its offering from the existing players online travel meta search, Tanna responded - “Travel is just one of the first product from our portfolio of services. We will be India’s first Online Comparison Portal offering services ranging from Travel, Hotels, Tour Packages, Broadband, Electronics, Finance and so on. We will keep innovating and helping our users to get best deals available”.

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redBus introduces bus booking for BMTC service to BIA

I have updated all the BIAL transport information in October 2008. Please use the "Bus" link on the main menu bar. Redbus DOES NOT accept online bookings for Vayu Vajra anymore.

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Indian Travel Agents need to EARN their income

From October 1, 2008, airlines in India are going to stop paying commissions on their tickets sales by travel agents.

Travel agents are understandably incensed. Until about a year ago they used to earn 9% commission, which was dropped to 5%, and in another 2 months, will drop to 0.

Industry experts say most small agents will shut shop, while the bigger ones will earn special bonuses, instead of commission, from airlines, which will get increased, even further, thanks to the smaller agents closing down.

The various travel agents' associations, whose members account for 85% of tickets sold, have threatened to stop selling air tickets, which will impact the Rs. 33,000 Crore airline industry in India.

For many smart customers, travel agents were already operating in the Zero Commission regime, since we would take back the commission, in the form of discounts.

Painful as it is, it is time for travel agents in India, to start walking the extra mile to earn their commissions. As a customer I do not need to pay 5% to a travel agent to just do an online booking that I can do myself. In most mature markets, travel agents receive no commission from the airline, and charge service fees, which demands the provision of value addded services.

For many years, I have been telling my travel agent friends that they need to provide services commensurate with their commissions. Start providing holistic travel related services. Hotels, car rentals, visa and passport services, travel insurance, travel advice, and tours, are just some of the areas they must look at.

Online travel agents, such as Ezeego1.com, Cleartrip.com, Yatra.com and Makemytrip.com have already started finding alternative sources of revenue. Some these agents have less than 30% of their total revenues coming from airline bookings.

Agents who develop skills and offer services that help the customer find better deals, and an easier travel experience, will survive, others will just disappear in to history.

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Thomas Cook India launches travel portal

Will target internet savvy leisure and corporate travellers
By Anita Jain | Mumbai

Thomas Cook (India) Ltd. launched www.thomascook.in, a complete travel portal offering end-to-end travel solutions for both B2B and B2C customers, in Mumbai today. The portal will offer hotel inventories from UK based hotels4u.com, which was acquired by Thomas Cook in February this year. The website aims at targeting the internet savvy leisure and corporate travellers, travel agents and partners who will be integrated with the offline business of Thomas Cook India. They will also offer travel and travel related financial services to its customers.

The website provides for online booking of travel insurance, 800 holiday packages including Thomas Cook’s own 100 per cent holiday packages and offers Rail Europe passes and tickets. Apart from this, the portal features over 750 domestic and international airlines, over 30,000 hotels and 30 cruises. With the introduction of a separate portal for the Indian market, the company is positive about its future growth.

Madhavan Menon, Managing Director, Thomas Cook (India) Ltd, said, “We are currently working on the plan and will soon be ready to offer the inventory of 30,000 hotel inventories from all over the globe through hotels4u.com. Also, after the introduction of the inventories in Indian market, clients will be able to book and pay online for their hotel bookings which is at present active only for flight booking.”

Giving an insight into the salient features of the website, Amitabh Pandey, President and Head, E-Business said, “This initiative will extend our reach enormously. Our portal offers a whole range of travel products and related financial services including domestic and international flight booking, foreign travel insurance, hotels, cruises and Rail Europe tickets and passes. This channel will significantly augment our extensive distribution network.”

He further added, “We are going to increase the volumes in the flights, hotels, travel insurance and packages section. For cruises, we will add more options through our parent company Thomas Cook, which offers the highest number of cruises in Europe. Along with increasing the inventory, we are also going to enhance our payment gateways on the portal.”

With a view of huge potential in internet banking in India, the company is putting in efforts to enhance the services online. “At present, only HDFC bank is online for internet banking, soon we are going to link up with more banks including ICICI bank. We also plan to introduce foreign exchange service online. We are facing certain government constraints on selling foreign exchange online in India, and hence are in talks with Reserve Bank of India (RBI) to look into the matter.”

Source : TravelBizMonitor.com

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