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Why The Convenience Fee On Online Flight Tickets Has Gone Up

The convenience fee for booking tickets through Online Travel Agents like Cleartrip, Yatra and MakeMyTrip has gone up significantly: MakeMytrip, Yatra and Cleartrip are each charging Rs 125 as a ‘convenience fee’. The issue was brought to light on Twitter by Mahadevan Jayaram. The increase to Rs 125 is significant, given that customers were earlier being charged around Rs 40.

As per an email we’ve received from Cleartrip, the reason behind this inordinate increase in convenience fees is that airlines have withdrawn a ‘pass through’ feature to save costs on payment processing. In case of credit card, debit card, net banking and cash card fees, charges levied by banks and cash card companies were earlier borne by the airlines, but they’re now being passed on to customers as a convenience fee. Airlines have also started charging a convenience fee for transactions on their website too.

A few things to note:

– We checked three OTA’s, and the convenience fee is the the same across the board. Also, the decision to pass the costs to customers appears to have been taken by all airlines. In both cases, this smells of cartelization, and there’s nothing competitive about this decision.

– The fees charged by the OTA’s are higher than that charged by the Airlines. Indigo charges Rs 100 as convenience fee for domestic flights and SGD 3 for Singapore flights, while Jet charges Rs 105 for domestic flights and Rs 210 for International ones, in Economy class. MakeMyTrip, Cleartrip, Ixigo and Goibibo charge a convenience fee of Rs 125 per passenger.

Lower Commissions – Agents VS Airlines

Remember, that in 2008, many airlines, including International ones like Singapore Airlines,and  British Airways and Jet Airways and Air India had switched to zero-commissions and asked agents to levy a commission fee, which had led to many online travel agents boycotting these airlines. Later, the airlines reached a compromise agreement with the Travel Agents Association of India (TAAI), and Jet Airways, Air India and others restored the commission, on the gross fare at a lower 3%, instead of 5% on basic fare.

In July, this year, Jet and Air India decided to lower commissions from 3% to 1% but the  TAAI asked Air India to defer the reduction to 31 October. Travel agents including MakeMyTrip proposed that full service airlines could charge an additional service fee passing the burden to the travelers but IATA Agents Association of India (IAAI) filed a Writ Petition with the High Court of Kerala against full service carriers such as Air India against reduction of commission. However, the Court ruled against them and said that Commission for air travel agents cannot be included in the air fare and agents cannot insist on it. So OTAs will now look to compensate for this through increased service charges.

Anupam Saxena also contributed to this post

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