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28 Nov, 2011

Airlines Forget Agents’ Role In Their Success – Indian Travel Agent

P.Sampath Kumar, National General Secretary, TAFI

(This viewpoint reflects the Travel Agents perspective on the subject “The IATA Agency Program Today”, presented at the Travel Agents Federation of India (TAFI) annual convention, Macau, 23 November 2011. The views expressed are solely those of the author.)

Long gone are the days when Agents valued “IATA Accreditation” which had some meaning, respect and value. Today being an IATA Accredited Agent has just become a symbol of torture unending. The Agent has no time to devote to what he or she does best – marketing, bring value to the distribution chain and serving the end customer/passenger…which is the very reason for our existence.

Now, just a bit into history lest we forget. We Agents existed much before airlines came into being by selling rail tickets, voyages on shipping lines, conducting coach tours, etc. It was the airlines which came to us for marketing support when there were no modern day contraptions like “the Computer”, seeking Agents support in selling, handling, processing and servicing traffic besides issuing the ticket. This partnership of equals over decades made many of the modern international airlines the Mega Giants they are today.

In all this, the modern IATA – Association of the airlines came into being sometime in the mid 1940s. It’s relevance just grew when it was granted the immunity to hold Traffic conferences by Governments of countries who mainly owned the Airlines to oversee the standardization of documents, and bring about a Tariff regime in practical terms where the passenger could do a multi-sector journey through many countries using a number of airlines yet paying for it in a single currency, while retaining the right to regulate – “fares and rates subject to Government approval.” This avoided cut-throat competition between airlines and to have a level playing field, in it also came the pattern of Agent-Airline relations and the first Agency Agreement in early 50s, while ensuring that the interests of the consumer was protected.

But somewhere down the line with the Governments began losing interest in being in the business of civil aviation, more and more private airlines came into being in many countries across the world and with it came deregulation. Tariffs are no longer standardized and regulated. The mayhem of cut-throat competition not merely between the IATA member airlines or FSC (full-service carriers) as they are come to known today but also outside the fold the new entrants or Airlines commonly known as LCC (low-cost carriers). Tariff structures blurred and market share became the name of the game. Bottom lines – profits no longer mattered. Somewhere in all this the Agent’s remuneration became a huge percentage and burden on the ever dropping tariff established by airlines who only looked at going Cheap, cheap, cheap – realistic costing based on a model of Buffet pricing gave room to a la carte with unbundling of Tariffs and slapping on extras for every little convenience which was provided to a passenger earlier is a matter of fact.

Which brings me to a question which I have for a long time been wanting to ask ….. what is included in the base fare the airline’s establish and publish when everything today is extras in the form of fees and charges in the guise of transparency?

In all this where does the professional Travel Agents fit in, no longer equals but slaves to the master whom we helped create. Then we have the Computer – to which we have all become slaves simply because we think it makes life easy and simple, with a push of the button the airline can change its Tariff [Dynamic pricing], rules and regulations can be made or changed again by a airline at a push of a button, a booking can be effected or cancelled by agent/airline at the push of a button, and then we have the www where a customer can be approached at anytime day or night and information made available so that he or she can secure a seat and obtain the ticket at a push of a button in a DIY form. But in all this thrust towards computerization what has been conveniently forgotten is the human interface and the power of influence.

In all this IATA has become the draconian it was never meant to be, through it’s Agency Program, it signs a Agreement with Agents seeking accreditation after making them fulfill it’s criteria by way of security standards, qualifications and financial standards etc. And only it assures on behalf of its members guaranteeing Ticketing rights and remuneration for services rendered to its members by way of commission for each ticket sold with no strings attached [in other words full compensation for services rendered to the member]. Yet the sad truth is its rules and regulations by way of resolutions is only on paper. Many of its Members today control ticketing authority and do not pay commission for each ticket sold by an gent.

Which brings to the fore the value of accreditation. When IATA allows it’s members to flout resolutions with disdain – it’s members raise ADMs on Agents indiscriminately for all sorts of weird reasons including using the BSP mechanism for GDS misuse, while ensuring every letter and word in said resolutions apply on Agents forcing them to be guarded to such a extent that it makes Accreditation a nightmare.

IATA seems to have become such a institution with the support of its mega airlines that it is in a position to even dictate to governmental authorities, instead of the other way round. Look how IATA is bringing change by way of a global resolution in India 818g or even a weekly payment when it seemingly creates a impression that a dialogue has taken place ahead with its inherent partner agent representatives that all are in agreement and by that it has fulfilled its obligation under competition laws and secured approval from the governmental authorities.

Then just take the example of Annual Fees it’s recent demand is to be noted a 295% increase in annual fees a poor agent is required to pay mandatorily yet no one is allowed to question why it took IATA over two decades that its costing was based on a currency which is little used in the market across the world, that it wakes up one day to say…hey we are not making money and have not revised Agents fees for a while let’s do it now.

This now brings me to an article which I came across vision 2050 for the shaping of civil aviation industry much beyond my life time. What surprised me is Agents are still there, but listed under “Rivalry among existing competitors” which leads me to believe that what we are seeing today is how to finish off a partner who has stood firm in good and bad times.

In view of the prevailing scenario and what is expected it is for each IATA Accredited Agent to introspect. Does it make business sense to continue to remain in a relationship which may have truly outlived its value? Is it time we begin looking for alternate bench-marking to value our expertise and secure our future as to how we are recognised as “travel professionals” while we also retail air tickets.

I believe somewhere lost, is our inherent “Pure Simple Conventional Wisdom.”

  • Lokesh

    Dear Mr. P.Sampath Kumar
    Nobody  has understood Aviation Business,IATA Relevance in India today better than you.  You have been over the years constantly trying to educate all but unfortunately none seems to understand the basics. Hats of to you for being bold vocal in calling a spade a spade. I also am happy that Travel Impact Newwire has brought out this factual article of yours without censoring.
    Respectful regards
    Lokesh