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OTAs, Travel Agents Reach A Compromise With Airlines – 3% Commission

Update: Hrush Bhatt, over at the Cleartrip blog, has explained the commission structure. We were awaiting a copy of the circular to analyse the changes, since we didn’t have the specifics of the reconciliation. Bhatt explains the changes as follows:

We’ll use a typical itinerary and fare to illustrate the difference between the previous commission structure (5%) and the newly announced structure (3%).

First, let’s take a look at the differences in the old and new structure:

  • Old: 5% commission paid on the base fare
  • New: 3% commission paid on the gross fare after deducting Rs. 225 PSF (Passenger Service Fee) charges

Here’s the itinerary and fare details:

  • Flight: Jet Airways 9W-331
  • Route: Mumbai-New Delhi
  • Fare:
    • Base fare: Rs. 2,250
    • Taxes & fees: Rs. 3,138 (includes Rs. 225 PSF)

Now, let’s do the math to see how much the absolute agency commission earned is for the same fare under the old (5%) and new (3%) structures:

  • Old: 5% of Rs. 2,250 = Rs. 113
  • New: 3% of Rs. 5,163 (5,388-225) = Rs. 155
Original Story (Dec 8th) :

The airlines have reached a compromise agreement with the Travel Agents Association of India (TAAI).  Consequently, Online Travel Agents like MakeMyTrip, Cleartrip and Yatra have now made Jet Airways and Jet Lite available on their flight search. Hrush Bhatt, founder of Cleartrip informs us that they’ve enabled booking for Jet and Jet Lite. We just tried out all three sites to confirm this.

It appears that TAAI sent out a circular to travel agents this morning, with details of the agreement. In case you have a copy of the circular, please do share it with us at nikhil@ medianama .com. The circular isn’t available on TAAIs website.

Last week, travel agents, both online and offline, had boycotted Jet Airways and Jet Lite, asking for the reinstatement of the commission regime. Jet, Kingfisher and Air India stopped paying the 5% commission to travel agents from November 1st. The travel agents have singled out Jet Airways because it is the market leader, and they were hoping that if Jet changes its stance, the others will follow suit.

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Update: Business Standard reports that Jet Airways will share 3% commission on the basic fare, with the Travel Agents. This is significantly lower than the 5-9% commission regime that existed earlier. Where it does make a difference – OTAs no longer need to charge a commission fee, and hence the rates are likely to remain the same in comparison with the Airlines’ sites.

P.s.: The results of our poll – we’d asked about what you would do if Travel Agents/OTAs don’t allow you to book a ticket on your preferred airline. 70% of the 30 voters said they would book their ticket from the airlines site, 30% would choose another airline.

Related: OTAs, Travel Agencies Boycott Jet Airlines; Not Expedia And Travelocity

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