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Pay a transaction fee on each air ticket from Nov 1
By    IANS
Tuesday,30 September 2008, 04:39 hrs
New Delhi: Yet another airfare hike is in the offing from Nov 1 as airlines and travel agents have mutually decided to add a new component, transaction fee, which would be a minimum of Rs.350 for domestic and maximum of Rs.10,000 for international tickets, an industry official said here Monday.


The zero-percent commission regime will be replaced by the transaction fee, which will be levied along with the airfare, the official said, adding that this will be reflected as "other charges" on the ticket.

According to the official, the transaction fee (besides regular fares) will be at least Rs.350 on domestic air tickets for the economy class, and Rs.500 for business class.

The fee on international air tickets will be Rs.1,200-2,400 (economy), Rs.2,000-5,000 (business) and Rs.5,000-10,000 (for first class tickets).

These charges will be uniform across airlines, including low-cost carriers such as SpiceJet.

Presently, air travellers are not charged any transaction or booking fee. Airlines pay five percent of the base fare as commission to travel agents. But with airlines incurring losses since the first quarter this year, many international and domestic carriers have decided to write off commissions for travel agents, which is being resisted.

Agents are demanding the postponement of the decision to scrap commissions till March 2009. About 85 percent of airline bookings in India are done through travel agents, including online agencies.

"The matter has been sorted out amicably. Airlines will pay travel agents the transaction fee on air tickets booked by us," said O.P Bahadur, a senior official of the Travel Services International (TSI), a city-based travel and ticket agency, one of the eight big travel companies across the country that make up the Travel Agents Federation of India (TAFI).

"Air tickets booked through airline websites or their offices too would attract transaction fee too but that fee will be earned by the airline," Bahadur added.

The new fee structure will ensure agents get better returns than before on the gross ticket value.

"We would earn more than double of what we get on international tickets now," said Bahadur.

The airlines have also agreed to print transaction fee on the tickets till December next year.

When asked, an Air India spokesperson in New Delhi said: "We are already going through major losses. The new transaction fee will help us operate efficiently."

Besides the transaction fee, which will hit passengers from Nov 1, Kingfisher Airlines last week said it would increase its fare from Oct 1, which coincides with the start of the festive season.

Other airlines too are expected to follow suit by early next month.

Jet Airways CEO Wolfgang Prock-Schauer recently said here its carrier was considering a fare hike during the festive season.
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Reader's comments(1)
1: I understand the transactional fee portion going to the travel agents, but if we book tickets online on the airline website, its a direct booking and no agen tis involved. In such a case it is unfair for the airline companies to charge fees from their customers.

A regulation should be in place just like the one that SEBI in the mutual fund industry has removed the entry load(initial fee) on MF investments for direct investments with the MF company.
Posted by: Ritesh Kumar Sinha - 12:00 AM Sep 30, ' 08

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