Travel agents’ boycott hits Singapore Airlines

April 3, 2009
Singapore Democrats

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Parul Chhaparia
Financial Chronicle

Airline has lost Rs 500cr in the past 94 days, says TAAI

The tussle between Singapore Airlines and travel agents on the issue of commission has cost Rs 500 crore to the largest foreign airline operating from India.

According to the Travel Agents Association of India (TAAI), the airline has lost Rs 500 crore in the past 94 days since travel agents decided to boycott it after a zero-commission regime was proposed. “They managed to sell some tickets because of certain blacksheep in the industry who continue to sell the carrier’s tickets for zero commission. The losses will increase if the agitation continues,” Harkripal Singh, chief representative of TAAI told Financial Chronicle.

While industry sources said that the loss figures may not be realistic, the Travel Agents Federation of India (TAFI) supported TAAI’s views. “The loss is possible for the simple reason that travel agents sell about 85 per cent tickets of the airline. So, even if some agents are still selling Singapore Airlines tickets, it still amounts to a huge loss for the company,” Vasuki Sundaram, secretary (western region), TAFI said.

The ongoing war between the travel agents and the airlines started when the airlines proposed a zero-commission regime. Travel agents, who were getting a 5 per cent commission on the sale of each ticket, refused to accept the move saying that it will put them out of business.

Even as the travel associations held a meeting on Thursday to take decisions, they said there was no possibility of withdrawing the agitation. “We will not withdraw until the airline stops victimising us. We are asking for our share as their distributors,” said Sundaram, who attended the meeting.

Singapore Airlines, however, seemed undisturbed by any such move. The airline said that it was committed and open to continuing the dialogue process with the travel agents to work toward a mutually beneficial solution. “Various meetings have been held to resolve the situation, with the most recent one on March 16, where we put forth a proposal incorporating feedback from agents. The associations, however, persist in adopting tactics that are not in the spirit of cooperation and dialogue,” CW Foo, general manager (India), Singapore Airlines said.

Singapore Airlines flies to eight destinations in India. The tussle with travel agents has come as an additional burden on the carrier, which has been struggling with its passenger traffic across the globe. The airline registered a 20.2 per cent decline in the number of passengers carried during February 2009, against the same month last year. In January, too, the total number of passengers it carried was down by 10.4 per cent compared with corresponding month last year.