Singapore Airlines face-off with travel agents set to continue

P.R. Sanjai
The Wall Street Journal

The managing committee of the Travel Agents Association of India (Taai) on Tuesday rejected a productivity-linked bonus offer by Singapore Airlines, continuing a stand-off between the airline and travel agents that is approaching its fifth month.

“Taai had demanded commission on tickets sold. In fact, we had asked all of our state committees to tighten their stand against Singapore Airlines with a slogan ‘Quit India’,” Taai president Rajinder Rai said, following the managing committee’s meeting in Kochi. Earlier, the airline had offered a productivity-linked bonus in which agents would get 2% of total sales provided they brought in business of at least Rs5 lakh a month.

“Tafi (Travel Agents’ Federation of India) members had overwhelmingly rejected the productivity-linked proposal since it is not the remuneration equal to commission… Moreover, there is no continuity for this scheme since it is negotiated every year. Nothing stops Singapore Airlines to stop this (a) few months down the lane,” said Ajay Prakash, national general secretary, Tafi. The two groups had made the decision late last week; the Taai managing committee meeting in Kochi on Tuesday was to ratify this decision, among other things.

This is the first time Singapore Airlines made an offer similar to other global carriers since it did away with a 5% commission on each ticket sold. Of the 72 international airlines operating in India, at least 16 do not pay commission to travel agents.

C.W. Foo, general manager (India) for Singapore Airlines, confirmed the offer in an email to Mint. “In the meeting with the travel agents associations on 12 May 2009, we offered (a) productivity-linked incentive scheme, which covers a broad base of travel agents i.e. a modest productivity target of Rs5 lakh per annum with 2% incentive,” he said.

He said the airline continues to operate in the zero commission environment, while recognizing its relationship with agents through the productivity-linked scheme. “Singapore Airlines will continue to keep channels open for dialogue with the associations in order to arrive at a mutually agreeable solution that would benefit all parties, including our customers,” he said.

A leading travel agent, who continues to sell Singapore Airlines tickets, said on condition of anonymity that the airline’s proposal is impractical because the 2% commission is based on the basic fare, which can be as low as Re1.

“Agents were targeting Singapore Airlines because they were traditionally not willing to offer productivity-linked bonuses unlike other carriers. But if agents can survive till now having most international carriers not paying commission, the battle is not going to reach anywhere,” he said.

Biji Eapen, president of the Iata Agents Association of India, which has so 600 members across the country, is also standing his ground. “If we compromise on anything less than 5% commission, even Jet Airways and Air India will go back to zero percent commission,” he said.