"I am proud of Indian Democracy"

I learnt in elementary school that Democracy is government by the people, of the people and for the people; though when i grew up the definition blurred in my mind and I beloved it to be people (governed) by the government , (as per the wishes)of the government, and for the (welfare of the) government. There is a little bit of politician in every Indian and those who believe cricket is a religion in India are unaware that politics is a bigger religion. We take pride in discussing politics and we believe that it is our fundamental right to be the biggest critic of our political system. We take heart in blaming everything on the "System" and its custodians. Yet the system and its custodians have thrived and flourished as we continue to ridicule them. Our dissaray, disgust and discontent towards this "system" has seldom been able to translate into actions.

So what makes me say "I am proud of Indian Democracy'. Well for that we have to move a little out of our country and take a whirlwind tour of the world as to how different countries and its political systems (including democracy) are faring. Lets consider our neighbors first; Bangladesh is a failed democracy dominated by two begums both of whom have spent a considerable amount of time in jail following a coup by the army. An election is expected this December after nearly 5 years of military rule. Bhutan is the newest member of Club Democracy after its king shed its power in favor of a democratic set up early this year. Nepal is again a state dominated in the past by kings and rulers rather than by democratic elected governments. The king and its palace was toppled this year and Maoists who are self proclaimed militia gained power after democratically held elections. It has a long and rebellious history of failed governments and military intervention and coups. Sri Lanka is fighting Tamil Tigers as it tries hard to keep a grip over its democracy which has been marred by assignations and violence. China is thriving and flourishing, but its is the biggest and the most successful of the surviving communist governments with strong dictator like leadership. We have seen bloodless transition of power last time in China, but it faces huge challenges on humanitarian and social justice front. Government intervention and suppression of rights is a way of life for people in China and they are ready to accept and live with that as long as the government and its policies are providing them with means of subsistence and support. Little does the people understand that China's economy is growing on its exports and foreign demand for its goods and its is able to do that by suppressing domestic demand and not providing enough avenues for raising standard of living of its people. China has amassed huge physical infrastructure in the past three decades, but its social infrastructure leaves a lot to be desired.

Russia again is a perfect example of a growing and emerging economy being ruled by a Czar named "Putin". He can twist and turn the laws to his favor and become a prime Minister after his term as President expires and still continue to be the power center of Russia. Worst still, the judoka PM nominates one of his strong men as the next President. There are strict checks over Media and people of Russia patronize Putin for he gives them the satisfaction and hope of return of their lost glory in the world by his aggressive and dominant politics. There is a huge disparity of income and living standard in Russia and government encourages the rich to be richer. Doing business is tough in Russia, as government can put you in a jail for any anti Putin sentiment or activity (as happened with one of the richest man of Russia, who supported anti Putin parties)

Another nation in news recently for all the bad reasons was Thailand. The yellow mob supported by the king took siege of country's international airports in Bangkok and government offices only to cripple the government (which was elected amidst reports of vote rigging). Military supported the King and his followers for a second time in four year toppled a democratic government only to be replaced by the party that found favor with the king.

Zimbabwe, Somalia, Nigeria, Kenya are troubled states with moderate to high level of failure in governance. Zimbabwe particularyl is being ruled by a person, who I think is more lethal than any fission or fusion devise. His action or non action is driving droves of people to deep poverty, starvation, disease and malnutrition. Conditions have gone from bad to worse in a country which was once though to be a rising star in Africa. A truce with the opposition leaders is an eyewash and all seem to be hand in glove, in the worst "genocide" of this decade. Somalia and its infamous pirates yet again prove the point what a failed system or governance can do to a country. Youth in Somalia believe that pirate route is a better career prospect than putting you life on razor's edge in an area infested with local insurgency and poor living conditions.

To some better governed countries now. We consider US to be a perfect example of democracy and its immaculate telecast ed presidential campaign is the envy of any political setup. We take solace in showering heaps of praise on US system of Government and its conduct. I have some doubts, and some of them might be contentious. In US the entire set of government is too concentrated at the top and dependent on the personal charisma and leadership qualities of presidential candidates and their running mates. In India we blame Gandhi and Nehru clan for family dominated politics , but Bush, Clinton and now even Kennedy family's recent emergence in US politics must give us a sense of pride for developing a "Family Business Model of Politics" which even US is aping now. Point is why arn't we complaining about family dominance of politics in US, while our voice will go hoarse crying about such things in India.

Bush is a classic example of how a country and its political system highly depended on a single person, giving him sweeping powers can falter if such person turns to be incompetent or devoid of personal leadership qualities and charisma. Uncle Sam erred in voting Bush over capable leaders like Gore and the price which it has to pay comes in the form of two continuing wars, a sagging economy, weak social infrastructure and lack of direction going forward.

Obama promises changes, but I am highly circumspect after watching Bush in action for the last 8 years. He promises change, sure everyone wants that, but Mr Hussain (yup Barrack Hussain Obama) lacks experience in untested waters. The US set up undermines the role of opposition and they rarely play a constructive and active role in the Congress (rather they would like to wait for their turn to call the shots.)

I consider myself to be fortunate that I am born in a country where I enjoy my fundamental rights unconditionally. Rarely has the fundamental rights of the citizens being suppressed in India (except during emergency imposed by Indira Gandhi). Even the lone instance of emergency was punished with the change of guard at the centre after three decades of Congress Rule.

Judiciary and Presidency works independently and impartially (at least literally) devoid of any pulls and push from the executive set up. Federal character has flourished and emergency of regional parties at the national level and indicative of the representations of different regions and sub groups at the national level. Opposition plays a constructive role (rather more strictly than required) and cooalition politics keep arbitrary and dictator leadership and decision making at bay.

There are some byproducts of democracy when people regard us as a "Soft Nation" but I would take that tag any day for the freedom this democracy gives me. Caste and religion based politics and criminalization of politics coupled with corruption are the by products of democracy which are eroding its value. These things set right I am proud to live and be governed by a political system where everyone from the President to the Sarpanch, from Chief Minister to the union leaders, from Municipal Corp orators to the Market Trade Union Leaders are democratically elected.

"Attempt to Rape" world economy

Imagine a young, dynamic, super rich elegant lady in her 20s plush with style, substance, power and lots of oooomph. This imagination may have raised quite a few things besides interest, but let your imagination run a little more wild and imagine her wearing skimpy clothes, coming out of a night club high on tequila and immeidately being followed by a group of goons. Well she gets caught in a secluded corner of the street with no policing and the goons try to overcome her and taste her beauty . She tries desperately to save herself from getting mowed down, but little is she able to do. The question we may ask here is, will she escape the goons or will she loose her cherry ?

Applying the same logic to what is happening to the world economy, the sultry girl of substance may be classified as the world economy in its prime (around the beginning of this year) with buoyant industrial activity, high levels of liquidity resulting in higher consumptions levels and thus higher demand for capital and consumer goods which in turns translated into higher returns in property, capital and money markets. But when the world economy got secluded in a corner triggered by high crude and commodity prices , while the dynamic lady was still leading a highly fashionable lifestyle, she got herself in the trap of goons risking loosing her cherry. The watch dogs of the economy failed to put regulations and proper policing in place and thus came this event of attempt to rape of the world economy (which we better know as recession) which could well translate into a full fledged rape or even brutal killing associated with it (prolonged periods of recession or a scenario of depression) , if watch dogs and the regulators behave in a arbitrary, individualistic and non cooperative manner.

The events have precipitated with lust for greed and aspirations for high returns by developed economies and creation of toxic assets by undermining the risks associated with them. Sharing, insuring or diversifying the risk does not under any circumstances reduces the toxic natures of the assets you create or invest in ( as happened with mortgage bagged securities). There was a clear imbalance in the world with savings of emerging economies being channelized in developed world economies like US to finance the deficit between domestic savings and demand for credit. US in a state of high headedness and over confidence failed to put proper regulations and check on unorganized and inorganic growth of its industry and the way American companies do business. The administration, in fact sometimes aided and applauded the way Americans do business, even if that meant the erstwhile Clinton administration issuing a diktat to banks to increase sub prime lending, without even putting a proper mechanism in place to ensure such lending does not adversely affect the NPA s or sub prime assets of these banks. Worst still the banks, financial institutions, car companies etc were encouraged by liberal M & A rules to grow beyond their size and matter to become flat footed dinosaurs. These dinosaurs are holding these economies to ransom and a demand for bailout almost comes as their fundamental right. The failure of any of these giants risk the very survival, health and fundamental of these economies. A big question here is "Is it safe for governments to allow companies to gain scale and size, which can later put these economies to risk by poor performance or risk of failure of these companies"

Every fall of a century witnesses a shift in world power center and in the 21st century we are witnessing a softening of grip of developed countries like US on world economy and growing influencing of BRIC countries, particularly Chindia. Breton wood institutions like IMF etc have failed to excite any interest or influence in the world affairs. With revision of estimates on recession numbers and more bad news coming daily, we are moving towards a bottom which can push the entire world economy in a long and lasting period of recession or may even push us into depression. Most of the countries are exhausted with the monetary measures of containing the free falling GDPs and the fiscal measures are already strained as fiscal deficit of many developed and emerging countries are putting their currencies at risk. A currency crises is looming large and the threat of deflation is unavoidable.

These are tough times, but tough times give us an opportunity. We need to reform, transform or we will persish. The choice clearly is ours, whether we want the golden egg or the golden goose.

The Lure of Tomorrow - Research findings on Procrastination

(Wray Herbert research findings on Procrastination. Sum has written on procrastination at work place some time back)

New research on why we procrastinate and what we can do to follow through on at least some of those plans for the new year.

Dec 10, 2008

Late holiday shoppers will soonbe rushing out to get the things they'd planned to buy way back in November, when they made those well-intentioned lists. And by New Year's,people will start thinking about projects: updating that resume, cleaning out the attic, starting that exercise routine. But the sad reality is that most of us will not follow through on these commitments, and not because we're insincere. We'll just never get to day one. Tomorrow is always a better time to get going.

And tomorrow and tomorrow and tomorrow. Procrastination is a curse, and a costly one. Putting things off leads not only to lost productivity but also to all sorts of hand wringing and regrets and damaged self-esteem. For all these reasons, psychologists would love to figure out what's going on in the mind that makes it so hard to actually do what we set out to do. Are we fundamentally misguided in the way we think about plans and effort and work? Is there some perverse habit of mind that automatically dampens our sense of urgency? Are we programmed for postponement and delay?

An international team of psychologists has begun exploring these questions in the laboratory. Led by Sean McCrea of the University of Konstanz in Germany, the researchers wanted to see if there might be a link between how we think of a task and our tendency to postpone it. In other words, are we more likely to see some tasks as psychologically "distant"--and thus to consign them to some vague future rather than tackle them now?

Psychological distance is a well-documented idea. It's been shown that people think of geographically distant events and ideas as less detailed and concrete than things taking place nearby. So for example, "locking the door" means simply turning the key here at home, but locking the door 3,000 miles away means security and personal safety. McCrea and his colleagues suspected that this same cognitive oddity might show up in the way we think about time and tasks. That is, vague, abstract tasks might be easier to mentally postpone into the future than concrete tasks. They decided to test this notion in a few simple experiments.Here's an example. The psychologists handed out questionnaires to a group of students and asked them to respond by e-mail within three weeks. All the questions had to do with rather mundane tasks like opening a bank account and keeping a diary, but different students were given different instructions for answering the questions. Some thought and wrote about what each activity implied about personal traits: what kind of person has a bank account, for example. Others wrote simply about the nuts and bolts of doing each activity: speaking to a bank officer, filling out forms, making an initial deposit, and so forth. The idea was to get some students thinking abstractly and others concretely.

Then they waited. And in some cases, waited and waited. They recorded all the response times to see if there was a difference between the two groups, and indeed there was--a significant difference. Even though they were all being paid upon completion, those in a what-does-it-all-mean mentality were much more likely to procrastinate--and in fact some never got around to the assignment at all. By contrast, those who were focused on the how, when and where of doing the task e-mailed their responses much sooner, suggesting that they hopped right on the assignment rather than delaying it.

This makes sense in an odd sort of way. When you first think about the possibility of trying something new, you're focused on why: What's the purpose? Does it make sense for me to do this? It's still just a distant possibility, and these are the things that matter. Only as you get closer to actually taking on the task do you start to think of the more immediate how-to details. So conversely, thinking about the how-to of a job gives it immediacy--and urgency.Even so, the scientists decided to double-check their initial findings with a different kind of laboratory technique. In this experiment, the task was to complete sentence fragments, either in an abstract or a concrete way. For example, some might complete this fragment: "An example of a bird is ______." Others completed this kind of fragment: "A bird is an example of ______." The first requires a concrete example--an indigo bunting, for example, or scarlet tanager--while the second asks for an abstract category--warm-blooded vertebrates, say. So again the experiment primed one cognitive style or the other, and again the psychologists logged in the e-mail response times.

The findings, reported in the December issue of the journal Psychological Science, were very clear. Even though the sentence fragments really had nothing to do with the actual task, those primed for concrete thinking were much less apt to delay and postpone than were those primed for abstract thinking. They saw the task as more immediate and acted with more urgency. Those prompted to give vague and amorphous answerswere indecisive.

Lots of psychology experiments don't have a practical take-home message, but these do. You know that exercise routine you've been talking about starting up in January? Well, forget about how virtuous it is, or how healthy, or how it might boost your confidence. Instead, think about putting on your sneakers and tying them, one at a time; entering the front door of the gym and walking to the first treadmill you see; stepping aboard and starting to move your legs, right leg first.

Wray Herbert

A mess called TAAI and TAFI

Clarifications sought from TAAI / TAFI President
(Sum's take on Transaction Fee issue and issue confronting small and medium TAs, clarification for which is sought from Industry Assocations)

1. The validity of the transaction fee model.

Since the validity of the agreement signed with most of airlines is Dec 2009, what is the stand of the airlines and TAAI on extension of the agreement and transaction fee to be charged? An agreement on which the revenue of an agency depends cannot be a knee jerk agreement of short period (1year) with lack of clarity about its validity in the long run. TA's will not be able to transform and build a business model around this agreement in light of lack of clarification as to its validity in the long run (3-5 years).

2.The termination clause of the present agreement

What is the minimum notice airline are expected to give to TA's for any changes they wish to make in the present agreement including termination/ change in method of charging OC or change in the rate of Transaction Fee.

3. Notice of reduction of commission by the airlnines

Why did TAAI agree on a notice of 60 days by the airlines for reduction of commission and introduction of transaction fee, while some of the members have signed contracts with the clients offering discounts on a yearly basis?

4. Rationale behind TAAI Convention at London

What are the successes of TAAI convention held in London and what was the rationale behind holding a convention of such large scale overseas and spending huge sum of money, whereas the industry was amidst a crisis of erosion of its revenue base. Why was the convention not held in India and support of the members mobilized on a much higher scale to carry and conduct protests on the commission issue


5. Negotiation with the airlines

Who were the members who were a part of the negotiating team of TAAI while negotiating with the airlines and what was the size/ nature of their business. Why was there no referendum on the issue of acceptance of transaction fee and why was there no representation of small/ medium travel agents in the negotiation process?

6. Same transaction fee for different RBDs

Why did TAAI not negotiate a model with the airlines, where airlines could come up with private fares with no commission on lower levels of fares/ RBD's, but offer commission on all higher level of fares including economy, business and first class (The airline can offer private fare on its lowest fare levels and offer commission for higher fare levels thereby not discouraging an agent who is selling higher level of fares). With the implementation of same transaction fee for all levels of economy class, airlines are actually discouraging agents who sell higher RBD's.

7.Why is there a sudden change in the stand of TAAI from anti TF to pro TF.
8. Efforts by different associations

Why has there been no coordinated effort by TAAI/ TAFI to jointly take up the issues with the airlines and come on a common platform to discuss issues with the agents at the bottom of the pyramid and help them reform their business models.

9. Call for bycott

Why has there been no call of nation wide boycott of all airlines, who are not accepting TAAI stand on TF on the ticket

10. Demand / Supply Rationale

While with the levy of TF there has been an increase of 15-20 % in airfares with little no change in demand (as per what most of the airline heads are quoting). Does it not make more sense to increase all the airfares by 5-7 % (instead of 15-20 % in case of TF) and retain the same level of commission? The airline yield will increase by 5-7 % and this will offset their cost on account of 5% agency commission. Again here some fare levels can be sold, as private fares with no commission to TA's and TA's will be free to charge transaction fee.

Bar Stool Economics

Bar Stool Economics by David R. Kamerschen, Ph.D.

Suppose that every day, ten men go out for beer and the bill for all tencomes to $100. If they paid their bill the way we pay our taxes, itwould go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar everyday and seemed quite happy with the arrangement, until one day, theowner threw them a curve. 'Since you are all such good customers, hesaid, 'I'm going to reduce the cost of your daily beer by $20.Drinks for the ten now cost just $80.The group still wanted to pay their bill the way we pay our taxes so thefirst four men were unaffected. They would still drink for free. Butwhat about the other six men - the paying customers? How could theydivide the $20 windfall so that everyone would get his 'fair share?'They realized that $20 divided by six is $3.33. But if they subtractedthat from everybody's share, then the fifth man and the sixth man wouldeach end up being paid to drink his beer. So, the bar owner suggestedthat it would be fair to reduce each man's bill by roughly the sameamount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid$14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59(16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began tocomparetheir savings.'I only got a dollar out of the $20,'declared the sixth man. He pointedtothe tenth man,' but he got $10!''Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar,too.It's unfair that he got ten times more than I!''That's true!!' shouted the seventh man.'Why should he get $10 back when I got only two? The wealthy get all thebreaks!''Wait a minute,' yelled the first four men in unison. 'We didn't getanything at all. The system exploits the poor!'The nine men surrounded the tenth and beat him up.The next night the tenth man didn't show up for drinks, so the nine satdown and had beers without him. But when it came time to pay the bill,theydiscovered something important. They didn't have enough money betweenallof them for even half of the bill!And that, boys and girls, journalists and college professors, is how ourtax system works. The people who pay the highest taxes get the mostbenefit from a tax reduction. Tax them too much, attack them for beingwealthy, and they just may not show up anymore. In fact, they mightstart drinking overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.For those who do not understand, no explanation is possible

Where hostility to migrants is most intense

Public opinion on immigration
Foreigners, go home
Nov 26th 2008From Economist.com
Where hostility to migrants is most intense
ATTITUDES to immigration vary widely in Europe and America. According to a study of seven countries published by the German Marshall Fund, Italians are the most suspicious of migrants, with almost 70% of respondents to an opinion poll saying that the majority of those in their country are there illegally. At the other end of the scale, most Germans and Dutch thought that immigrants were there legally. However, when asked if immigration was a problem or an opportunity, more Germans saw as it as a problem (as did a big majority of Americans and Britons). In troubled economic times hostility to migrants may grow

Monkey Business

Stock Market Meltdown decoded with this monkey business.........

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs10. The villagers seeing that there were many monkeys around, went out to the forest and started catching them.

The man bought thousands at Rs10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at Rs50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him. In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs35 and when the man returns from the city, you can sell it to him for Rs.50/-

The villagers squeezed up with all their savings and bought all the monkeys.

Then they never saw the man nor his assistant, only monkeys everywhere!! !

Economic Slowdown Simplified !

:- A simple story to explain Current Economic problem !!
Neatly sums up the situation today.

(Courtsey my friend Harish Kutty)

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

1) There were 3 citizens living on this island country. A owned the land B and C each owned 1 dollar.


2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar. *The net asset of the country now = 3 dollars.


3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.

*A has a loan to C of 1 dollar, so his net asset is 1 dollar.
*B sold his land and got 2 dollars, so his net asset is 2 dollars.
*C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
* Thus, the net asset of the country = 4 dollars.


4)A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.

* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
* The net asset of the country = 5 dollars. A bubble is building up.


5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.

* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.
The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.


6) Everybody has made money and everybody felt happy and prosperous.


7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."


8) A also thought the same way.


9) Nobody wanted to buy land anymore.


* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
* The net asset of the country = 3 dollars again.


10) So, who has stolen the 3 dollars from the country? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.


11) B had no choice but to declare bankruptcy. C has to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.

* A owns the 2 coins; his net asset is 2 dollars.
* B is bankrupt; his net asset is 0 dollar. (He lost everything)
* C got no choice but end up with a land worth only 1 dollar
* The net asset of the country = 3 dollars.


************ **End of the story; BUT ************ ********* ******


There is however a redistribution of wealth. A is the winner, B is the loser,
C is lucky that he is spared. A few points worth noting -


1. When a bubble is building up, the debt of individuals to one another in a country is also building up.


2. This story of the island is a closed system whereby there is no other country and hence no foreign debt.


3. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.


4. An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.


5. When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.


6.If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land goes up and down like a see saw.


7. When the bubble was in the growing phase, everybody made money.


8. If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A) and take part in the game. But you must know when you should change everything back to cash.


9. As in the case of land, the above phenomenon applies to stocks as well.


10.The actual worth of land or stocks depends largely on psychology (or speculation)

(Courtsey my friend Harish Kutty)

Happy Vacations !!!

Procrastination - Art or Science

Till some time ago, I always felt Travel Agency is the second most busy occupation (after Stock Brokers) for it require time bound, quick, prompt action & communication both with customers and suppliers. Being intermediary for a product or service is tough business but travel agency and stock broking in particular always keeps you on the toes (or rather on the phone). Then I came across “Mr Pappu” of our famous “Pappu Travels” from Bhatinda who like state employees was awarding himself extra leisure time by faking his busyness.

It is not uncommon for human fatigue and slackness to creep in, in such a high intensity, interactive and time bound business environment. Lack of motivation and repetition of tasks sometimes plague such environments with a phenomenon called “Procrastination”.

Procrastination is a big word to describe a type of behavior which is characterized by deferment of actions or tasks to a later time. It’s basically doing C’s and D’s in the figure 1e in order to avoid A1 or A2. It’s a habit we develop in the belief that it will protect us from unpleasant situations, and give us a temporary sense of relief. Procrastination is to travel trade what AIDS and Hepatitis is to our society – the silent killers. It specializes in “Fake Busyness”, which emphasis slowness over showiness, avoidance and delay over actions and downplaying situations and tasks over time bound deadlines. The cleverest and most prolific procrastinators like Mr Pappu are nerdy superstars for they play games which involve high skills of avoidance, deference and delays. His case is not exceptional for its picaresque twist. Every travel agency employee has a favorite way to practice procrastination; the frontline staff who besides handling customer calls, creeps in with some personal chit chats and love talk, the back office staff who’s a specialist in internet porn, though he may look a champu by look and feel.

It will take more than a clampdown on malingering to achieve lower procrastination. More fundamental changes are required in the basic structure, work culture and thinking process of the entire team including higher and middle level management. The big test will come this winter, when the commission clouds will bid adieu and the staff will have more and more free time at the disposal in a sluggish and weakening travel spends.

As we leave these “unpleasant tasks” unattended we often force them from Category 3 (Very Important/ Not Urgent) to Category 1 (Very Important/ Very Urgent) and this is where we are caught napping. In such a case a task which we have been procrastinating about snowballs into a major task with some very unpleasing recuperation.

Prioritizing is a habit which needs to be cultivated at the ground level and following the priority matrix every tasks needs to be handled with its merit. It’s the same as a batsman playing every ball to its merit regardless of reputation of the bowler.

The best way to handle procrastination is by using Nike’s “Just Do It” tagline. Do them first and handle them early in the day, lest they should hang like a sword over your head the whole day. Set deadlines for such tasks and don’t wait for the right mood (for it will never come). You won’t handle it when you are having a PMS and when you are overjoyed you definitely won’t like to handle such unpleasant tasks.

A Word of Caution – For you may successfully prioritize the tasks that are important and urgent and demands your attention (A1, A2, A3); always check that “C” is not your Boss’. (Ironically “C” is also the most popular “helping verb” used in North Indian lingo?)

"Frenemies" - Sleeping with the enemy'

‘Obamanomics” seem to have taken over Hillary and Bill, the way they endorsed Obama with such precision as the next President of US at the Democratic Convention in Denver. It’s one of those hard to believe handshakes which narrate how sleeping with the enemy is not a sin. Tough times are producing some surprising bedfellows and sleeping with the enemy just seems to be one of them. I call it “Frenemies” and wiki describes it as a portmanteau of friend and enemy which can refer to either an enemy disguised as a friend or to a partner that is simultaneously a competitor. So why am I talking about making bedroom stories with enemies (or rather Frenemies) when I should be concentrating on fixing my business, which is in the midst of a whirlpool of strangling relationship between airlines and the agents? Well that’s coz my margins are exerted and the principles (I hate using the word airlines these days) are turning the heat on my business by cutting commissions and competing with me directly. That makes me take a rabbit out of the hat and think of something as illogical and as radical as cooperating and working together with the rival trade and business entities.

With the global economy on the rocks, businesses everywhere are desperately searching for ways to save money or boost revenue – even if they require collaboration with the enemy. Arrangements in which firms compete vigorously with one another, while also cooperating in specific areas – known in management jagron as “co-opetition” – are not new. Airline (uhhhhg…hate using this word) has shared check in, gate management and other facilities to reduce costs and create economies of scale.

Few rivalries have been as nasty as that between two NY newspapers -Rupert Mudroh’s New York Post and Zuckerman’s Daily News. The two titles likes to bicker over which has bigger circulation and scurrilous gossip about each other are avidly reported. Yet, behind the scenes executives from both the papers are talking about working together in some areas, such as distribution, in an effort to slash costs. Such is the power of being “Frenemies”.

So why not give this concept a try in our beleaguered industry and replicate this model of “live in” relationship between two or more companies that come together for a common cause. Crafting co-opetition is a tricky business, not least because potential partners need to swallow their pride first. Firms have to figure out exactly where you are cooperating and where you are competing, and not get your staff confused.

It makes perfect business sense to consolidate and create economies of scale while retaining your business existence and identity. Travel agents across different markets (both geographically and different market segments) can join hands for a range of services and activities that can make them use size to their advantage. They can form cartels to avert the risk from big sharks and other predators (big consolidators and on line portals) by integrating and consolidating their business backwards. So while keeping the customer interfaces same the operating systems of these businesses can be strengthened by consolidation. Enormous cost and revenue benefits can be extracted from such relationships wherein using scale and size agents can procure and source bigger and better incentive deals from suppliers like airlines and hotels.

Imagine the case of four travel agents in a city serving different market segments getting together and cooperating to achieve higher levels to airline sales and thus attracting higher PLB and other incentives. Not only will they be able to share each other’s core competencies, they will become more competitive and adaptive and be able to service their clients better. Informal tie ups of this kind already exist in the industry through backdoor diplomacy but we need to take it to the next higher level of mutual co operation and understanding through well pronounced tie up and relationships wherein an alliance of kinds can be formed at the local, regional and national level. It’s not hard to imagine a travel agent alliance across India or maybe across the Globe gaining scale and size bigger than airline alliances aka Star Alliance types. So should we say “What an idea Sirjee!”

"Kiss Me" Model of Travel Agency Reform

(Sum developes a model of travel agency reform in the Zero Commission Ear and calls it "Kiss Me")

“Revolt, Reform or Perish” – writing on the wall is very loud and clear for the travel agencies in the zero commission eras. While TAAI, TAFI and sundries are already through with their measures of revolt, there is a lot of talk around the town and every one in the industry seems to be taking of reform. For traditional ticketing agents it’s almost like a comrade thinking of privatization reforms. The big ticket question here is “How to Reform/ evolve to outperform in the Zero Agency Commission Era”. It’s time for travel agents to go back to drawing board and redraw and reshape their business models. I would like to propose a model of travel agency reform and call this reformist model “Kiss Me” (No, I’m not getting kinky in these trying and testing times).

“Kiss Me” Model of Travel Agency Reform

K – Knowledge
I – Innovation
S – Service Driven
S – Specialization (Developing Core Competencies)

M – Meager Cost
E – Evolve

Let’s see how this “Kiss Me” model of travel agency reform help agencies evolve into a service driven, high performance, and profitable enterprise in the regime of Zero Travel Agency Commission.

Knowledge

Most important and the most ignored out of all the components. I have always believed travel agent is an ill informed community about the attributes of the product they sell, be it airlines, hotels, destinations or other derivatives. Most of the front line staff has little or no clue about the product they are selling. A hit and miss approach to customer counseling means a shaken customer confidence and his shift to alternate sources for information like website and travel portals. Questions pertaining to detailed information about facilities at the airports, aircraft configurations, special service requirements of airlines (like procedure for carrying a gun), destination information like special events and outback activities are often answered with a frown by the travel agent.

The answer clearly lies in getting and imparting knowledge to self and staff on all the products the particular staff is destined to handle and give that extra confidence to staff in his / her job profile. Destination specialist programs offered by tourism boards, certificate training programs from GDS and thorough search of airline website are some of the steps that might help. A weekly subject of interest may be taken up and studied/ researched by all the staff in the agency and on the weekend a short test concerning the same may be given to them. This will generate an element of interest and competition, and your goal of increased product knowledge will be achieved.

Objective is clear, in this competitive era when the airline websites may offer a lower fare than travel agents in future; the customer will rely on a travel agent for his knowledge of multiple products. Travel Agency needs to offer information/ knowledge to the customers which they would normally not get from a website. The leisure and business traveler must be ready to pay an incremental fee on the fare for the value addition by the travel agency. Product knowledge and information is one such value which agencies may add to their final products.

Innovation

Innovation in customer handling, pricing, promotion or product/ service attributes may differentiate an agency from its clan and make it stand out from the competition. A simple case of “Meet & Assist” being offered by an agency (for a fee) to its business and leisure customers at the airports will make it a preferred choice for the segment of traveler who needs assistance at the airports, like first time travelers, ladies traveling with infant/ kids, high profile business traveler, honeymooners (a flower bunch delivered at the airport will make their journey memorable). The agency using such innovation can provide this service to the customers of other travel agencies as well (for a fee of course). Other innovations like customer profiling, innovations in pricing (guarantying the lowest fare possible), mobile message alerts/ email alerts for flights, reserving preferred seats, rooms etc will be noticed and appreciated by the customers. A simple feedback call to customers on their return will show the agency’s concern and give valuable inputs. Innovative holiday packages like ladies only group package or a gourmet cuisine package of Rajasthan, or an airport transfer on a Harley Davidson, transfer for a dinner from the hotel on a camel are the kinds of innovation agencies need to suggest and arrange for its customers.

Innovation is the biggest attribute which can give a distinct identity to an agency and give customers a value addition which they are ready to pay for.

Service Driven

Every one talks of service, but it holds different meaning for different people. Agencies need to replace the concept of sales and marketing manager/ executives with Relationship Managers/ Executives (role reversal and not just change in Designations) to focus more on relationships with the customers. Service quality is to be identified and meant as building of bonds with customers and other markets or groups to ensure long term relationships of mutual advantage. Customer service parameters of pre transaction, transaction and post transaction considerations related to the exchange process with the customer needs to be handled with care. Every agency should necessarily involve itself in understanding what the customer buys and determining how additional value can be added to the product or services being offered, for this additional value will attract a relevant service fee. Agencies should focus on:

1. Customer retention
2. Orientation of product/ service benefits to the customers
3. Enter into long term customer relationships
4. High customer service emphasis
5. High customer commitment
6. High customer contact
7. Quality driven product/services, processes and people (Developing a quality culture)
8. Follow up and feedback procedures
9. Objective handling on service failures/ deficiency in services

Specialization

Specialization is an important way to generate propositional knowledge by applying general knowledge. It’s the opposite of generalization and the way we have seen the demise of general medical practitioners and rise of specialized medicos, travel agents needs to specialize and develop core competencies to survive in the zero commission era. Agency needs to spell all its area of operations and specialize in the one where it has skills and means to develop core competencies. It’s also important to shelve the areas which are proving futile and inoperative.

Some areas where agencies can specialize and develop core competencies:

1. MICE
2. LTC

3. Innovative and upcoming concepts in Indian tourism

a. Sports tourism
b. Heritage tourism
c. Spa tourism
d. Space tourism
e. Wedding tourism
f. Religious tourism
g. Wildlife tourism
h. Responsible/ Sustainable tourism
i. Wine tourism
j. Romance tourism
k. Self guided tourism
l. Theme tourism
m. Rural tourism
n. Self guided tours

4. Specialized services like

a. Visa Services
b. Corporate account handling
c. Destination management services
d. Hotel representations
e. Key account management

5. Cater to specialized segments

a. Students
b. VFS (Visiting Friends and Relatives)
c. Corporate
d. Government and Public sector
e. Leisure
f. Business Travel
g. Walk in / adhoc customers
h. Reference business through chain of advocators (who recommend the agency)

Meager costs

A penny saved is a penny earned. High inflation and cost pressures from spiraling salaries and property rentals, agencies are compounded with the problems of vanishing revenue base and sky rocketing costs. Service fee concept is expected to exert a lot of pressure on the margins and agents have to review their costs sheets and make deliberate cuts. Cost consciousness may include:

1. Staff costs needs to review and the utility and contribution of each staff to the sales/ profits measured against targets. Also ascertain opportunity cost of individual staff and introduce multi tasking in staff while performing their specialized functions. Technology is aiding the staff and more productivity can be expected out of each individual. Lay off in case of excess staff.

2. Fixed costs like rentals, electricity etc constitute a major portion of the costs and steps like consolidating operations of different branches in same city (at least merging low performing branches) can help save on rentals. But clear and deep thinking need to made and a cost/ benefit analysis be done before such decision making.

3. Promotional budget needs to be reviewed and low costs means of promotion like one to one customer interactions, regular mailers and tele calling can be more effective than advertising. Again a cost/ benefit analysis of the advertising medium and costs need to be done before initiating any new campaign.

4. Variable costs – Management need to keep a close and regular check on variable costs which most fluctuate with sale levels. Diverse and detailed reports on cost structure will help keep a track and control over costs.

Evolve

Lastly, evolve – or readiness to predict, recognize, accept and implement changes. An agency should focus itself on new and upcoming trends in the industry and keep itself abreast of all the issues that may affect its industry. An agency which evolves with time will be better prepared to alter its business models with time and emerge a winner.

I advocate the following steps for implementing the “Kiss Me” model of travel agency reform: (to be followed in the order they are given)

1. Environment Scanning (Internal and External)
2. Establishing Objectives
3. Market Segmentation
4. Developing Core Competencies
5. Developing right Product Mix
6. Establishing successful pricing policies
7. Promotion Mix
8. Distribution Strategies
9. Managing People
10. Developing effective service delivery mechanisms

Its time we change the way we see our businesses and take the right step forward in accepting and facing the challenges in front of us. Let’s emerge winners and challenge the dominance in an industry dominated and dictated by the airlines. Let’s say “Kiss (Keep it Simple and Short) Me” and in-corporate the changes in our revenue base effectively. “Long Live the Travel Agent”

Redefining the reform agenda – 10 point some one

(Sum's take on Indian Reforms scenario)

On the eve on Independence Day in 2008 lets conduct a post mortem of the status of Indian Reforms and develop a 10-point agenda for reforms in different sectors of India Inc. Its not about “What”, its about “How”? Here are 10 reform issues which are pending and which could raise growth as well as make it more inclusive and comprehensive.

1. Disinvestments
Never heard about the Disinvestments ministry in Manmohan’s Tenure. With the departure of comrades Disinvestments seems to be the buzz word and lowering government stake below 50 % will help PSU’s operate more freely and will help government coffers in the medium and long terms. I strongly feel that in a modern economy, government should keep itself to governing and concentrate on social and economic infrastructure; it should abstain from running businesses. Government has lined up a number of companies for Disinvestments, but sluggish stock markets and resistance from employee unions may delay / derail the process. It’s time for PC/MS combine to add steam to the process.

2. Urban Development

Some one just mentioned that our congested and crowded cities are first developed and then a master plan prepared to redesign, redevelop and reconstruct. Sluggish and unplanned urban development is the biggest dampener in slow infrastructure development and a big constraint on GDP growth. Villages are flocking to cities and cities are crumbling under pressure on resources. A major thrust on sound urban planning and development through a comprehensive policy with a sound delivery mechanism could add 1 % to GDP.

3. Highways

Highways are the face of any country and the arteries of growth for the economy. They have a transformational role both for development and growth. While China can think, plan and execute a road to Everest base in months, the case o building a simple road or flyover in India can rake years. The development of highways is moving at a slow speed; far slower than the country can afford. Problem here is not lack of resources, but lack of a comprehensive long term planning and I.M.P.L.E.M.E.N.T.A.T.I.O.N. Land acquisition reforms and push for faster highway construction does well for India.

4. Power
The biggest and best example of reforms in power sector is the Power Generation and Distribution Boards in West Bengal. Without giving any chance to the politically and reform sensitive people of Bengal, it has transformed itself into a profitable enterprise, simply by plugging holes in service delivery mechanism. My peers in Punjab are reeling with power cuts of more than 8-10 hours a day. Ironically, each successive government in Punjab is doing vote bank politics by giving free power to farmers. What about common man, who is made to pay for this? Besides power sector reforms back by a sound policy and unbundling of state electricity boards, I advocate the concept of “Pre Paid Power” where a consumer can buy certain units of assured electricity for a amount paid in advance. The power boards kitty will swell with cash from advances from rich and famous, this buffer can they be used to pay the dues and explore alternate sources of energy.

Another important aspect to highlight here is the use of diesel and other products by consumers for generating electricity through their gensets. The diesel, petrol, kerosene and LPG which government is already subsidizing, is being increasingly used for power generation in areas with heavy load shedding and power cuts. Another case of oil subsidies being misutilized ?

India with its unique location and see on three sides can actively explore setting up coastal wind energy parks (like the ones set up by Holland) and generating power from tidal waves. Wind energy potential is so huge that it, if effectively explored and utilized it can provide power to the entire peninsular region of India. Nuclear power will relieve India of its power woes in the long run.

5. Water

Clean, pure and safe drinking water is only found branded and bottled in India. The quality of drinking water ranks lower than many underdeveloped countries. Water conservation methods like rainwater harvesting, re treating the water and other water management methods are essential and critical to quality of life.

India is a land with a lot of river, and at any given time we can have flood and draught in different regions at the same time in India. Interlinking on rivers (though a costly proposition costing around Rs.100, 000 Crores) is a measure, which should be thoughtfully considered to solve the problem of water and it, can also contribute to generation of hydroelectric power.

A big slap on our face remains the high levels of pollution in our sacred and religiously important rivers (forget ecological importance) – Ganga, Yamuna and Narmada. Anyone listening?

6. Sanitation

It’s a major issue in urban, semi urban and rural India. It is imperative to build basic sanitation infrastructure (clean construction and maintenance arrangements) across India through PPP model.

Manual scavenging of human fasces is one the dirtiest job still prevalent in rural and semi urban India and must be done away with. (Already written a blog about this)

7. Housing

Housing is a national priority, but we are talking of economic housing in the millions of provide shelter, enhance quality of life and to provide security and stability and not of lavish up market accommodation running in Crores. To reduce disparity we need to develop housing projects, which discount the high land prices and provide accommodation to the weak and lower middle class of the society. This is as important as providing rural employment guarantee program and needs to be taken up at a national level. All private housing projects must have provision for low cost housing as a condition of their project approval.

8. Transport

Rail, road, water and air; all forms of transport needs to be reformed. Rail – Laloo has done a lot in terms of bringing the railways in green once again and generating reserved, but he now need to take it to the next level but means to taking up bullet trains concept between major cities like Delhi and Mumbai, Bangalore and Chennai, Bangalore and Mumbai etc. Dedicated freight corridors, expanding the rail network in northeast and the state of J & K should be taken up on a priority basis. The phenomenal success of Delhi Metro should be replicated and DMCL should be made the apex body for supervising and monitoring the progress of all Metro Projects in the country. There need to be urgency for developing Metro Projects in all cities with population in excess of 8-10 Lacs.

Road network has grown strong, but its still poor in states like UP, Bihar, Orissa and some parts of North East. Speedy implementation of road projects and highways with a strong vision of future will help India grow at a much faster growth.

Strong public transport system will enable the government to adopt free pricing of petroleum products and bring them at par with international prices. This will ease the pollution levels in cities with lesser vehicles on road.

Water transport both inland and coastal needs attention as; India doesn’t have a single passenger cruise terminal (of international standards). Developing ports with freight handling capacity and efficiency matching international standards will provide a lot of impetus to Indian Industry due to the unique geographical location of India with regards to Far East, Middle East and Europe.

I have already written a lot about reforms needed in the air transport industry. New and latest airports need to be built at lightening fast speed. Provision needs to be made for cargo and low cost passenger terminals. India need to convert its small air strips into small airports connecting every nook and corner of the country. Small aircrafts with low maintenance and operating costs needs to be developed. Private participation of international needs to be allowed in the private domestic airlines, which are already bleeding, and badly in needs to funds. Reform is a small word for what needs to be done with Air India. Air India with its unique geographical location had lost the competitive advantage of developing into a regional hub for airlines and an attractive tourist destination all thanks to our national airlines and poor airport and tourist infrastructure.


9. Rural Infrastructure
Wider roads, medical and education facilities, low cost “kuchha” airports, cargo management centers (perishable and processed agricultural products), telecommunication and IT connectivity, better access to financial institutions are just some of the many giant leaps we need to take to strengthen our rural infrastructure and have an inclusive growth for more than 600 million people living in rural areas.

10. Food and Agriculture Sector

Specific strategies for specific products, geographical areas and a grand vision for autonomous, centralized approach and action plan to achieve another Green revolution, Blue revolution, Silver revolution and many other forms of revolutions. I strongly feel that reducing subsidies and strengthening the implementation and delivery mechanism of many rural development schemes for up gradation of agriculture sector are required. India needs to uphold and strengthen its dominance in agricultural produce in the world. Sound economics needs to be applied in determining minimum support prices for the farmers and avoiding populist measures like free electricity, loan waiver; rather “kisan” smart cards should be introduced to give them access to benefits through better access to seeds, fertilizers, electricity and other essential goods and services. Agriculture procurement and marketing needs to be revolutionized so does reduced dependence on monsoon by means of assured irrigation.

(Supplementary) Medical Sector

I include this sector as supplementary as I feel medical care is a basic facility, which needs to be made available to every citizen of this country. This is a priority sector of the economy and social infrastructure in this sector needs attention. General medical practitioners have given way to specialists in big cities. Multi specialist hospitals with advance care facilities are coming up thick and fast. The state of government civil hospitals and dispensaries has taken a beating in rural and semi urban areas. There is a shortage of advance medical facilities in these areas. Rural areas even lack basic medical and maternity facilities in some parts of India. Social security of citizens and large-scale reform of all medical facilities is urgently needed. Provision of all medical students to have compulsory rural assignments before graduating is a welcome step and it needs to be supplemented with up gradation of medical infrastructure.

(Industries, Service Sector, Financial sector, land and Labor reforms needs to be taken up in Stage II of reforms)

Role of TAAI in the Zero Percent Agency Commission Era

(Sum's take on the role of TAAI and other trade bodies in the transitionary phase from commission based revenue structure to transaction fee based structure)

TAAI should broadly accept reduction in commission to zero as a change in the structure of revenue base of travel agencies from commission based to transaction fee based. The transition phase from commission based structure to a transaction fee based structure needs to handled and put into action based on a clear cut plan so that it does not affect the travel trade adversely.

A mechanism for the implementation needs to be worked out with airlines for this transition which involves a realistic and structured time frame and educating / training the travel agents to take up such changes

The following points needs to be addressed immediately

1. Airlines should participate in discussions with TAAI to develop a mechanism of change which involves a realistic time frame. (It should be different and extended from the one which is now set by the arbitrary decision of some airlines including Air India)

2. The structure of the new revenue base for the agents (transaction fee) needs to be worked out in detail with the airlines and a consensus arrived at with regard to the percentage of the transaction fee and its features which include answering the following questions:

a. % age of transaction fee
b. How it is to be shown on the ticket
c. How will airline charge the transaction fee in case of direct selling from its offices/ website
d. The role of airlines in direct selling and not undercutting travel agency fares

3. For the implementation part of the structure and to help travel agents across India cope with change in Business Models the following steps needs to be taken:

a. TAAI should get a detailed research done and project report developed by any of the leading Consultancy firm like PWC, McKenzie to help the trade body understand how such a transition in revenue base was handled in other markets and answer the following questions:

i. How the other markets handled such transition
ii. How will such transition affect the industry
iii. How can travel trade develop alternate business models / change in existing business models to accommodate such change in revenue base
iv. How can the TAAI as a trade body increase the acceptance and adaptability of this transition among the agents across India
v. How can TAAI and travel agents continue to work with airlines and agents increase their bargaining capacity with the airlines
vi. How can the travel agents retain their existing business
vii. How do travel agents compete with airlines (in case of direct selling by the airlines)

Such a research and project handled by a professional consultancy firm will give us an outsider’s view of the agency and how agents across the world handled such changes.

4. Cooperation / Interaction with travel trade bodies in other countries/ continents like ASTA in Australia and TIA in US to understand how they handled the transition from commission based structure to transaction fee based system. Following points can be discussed with them:

a. How change in commission structure handled by them
b. How have the travel agencies been affected by such change
c. How have they developed their business models to accommodate such changes
d. How has the transition as a industry been in light of these changes
e. How has the bargaining and relationship with airlines been affected

A broad based cooperation agreement is worked out with them and efforts made to form a global alliance of different travel trade bodies in the world that provide a global platform for discussing and research on common and specific issues concerning this trade.

5. TAAI should intensify its stir against the airlines which are non- cooperating and who are taking decisions affecting the travel trade in an arbitrary manner. Air India for instance made an arbitrary decision to cut the agency commission without an open discussion with TAAI. Trade bodies like TAAI should come up with circulars to all its members to blacklist such airlines and resort to “Gandhigiri” protest. For instance to protest Air India arbitrary decision making the TAAI should instruct its members to write “ISSUED UNDER PROTEST” on all Air India tickets by its members. The agents should also be advised to cut down on sales on such airlines. Airlines that are cooperating with TAAI and travel agents should be given preference and resultant circulars should be issued commending and recognizing these airlines to all its members.

6. TAAI should form a committee with airlines participation that is entrusted with the task of interacting with the agents at the local level (one committee with four teams for each region which should visit each state and its headquarters) to educate them on the transition from commission based structure to transaction fee based structure and help and guide them through this transition phase. The committee such formed should help agents develop / change their business plans and conduct an open house to dispel all their doubts regarding this transition

7. TAAI should set up a Helpline for travel agents at the National Level wherein a counseling and help regarding this transition is provided and agent’s queries are solved.

8. Each airline should be asked to circulate among all agents a detailed informative / educative circular pertaining to this change which includes how this change was effective and did not harm the industry in other markets. It should include the suggestions / measure how airlines and travel agents continue to work together and how this transition will not adversely affect the trade

9. TAAI in association with Airlines should conduct workshops / training programs (for a fee) which would help the travel agents get trained in skills that may be essential in developing ancillary services/ alternate business models. Like a short workshop on how to sell and develop holiday package products.


10. The revenue for all the above said programs/ measure should be raised by means of sponsorships/ affiliations from the airlines.

I would again reiterate that travel agents and trade bodies should not see this transition from commission based structure to transaction fee based structure as a threat to their survival; rather we should view this as an opportunity to reduce our dependence on airlines for our revenue base and base it on the services we provide. This will not only make the trade more professional and service oriented but also give each agent an opportunity to diversify its services and products and be successful in the long run.

Recommendations to TAAI

TAAI should broadly accept reduction in commission to zero as a change in the structure of revenue base of travel agencies from commission based to transaction fee based. The transition phase from commission based structure to a transaction fee based structure needs to handled and put into action based on a clear cut plan so that it does not affect the travel trade adversely.

A mechanism for the implementation needs to be worked out with airlines for this transition which involves a realistic and structured time frame and educating / training the travel agents to take up such changes

The following points needs to be addressed immediately

1. Airlines should participate in discussions with TAAI to develop a mechanism of change which involves a realistic time frame. (It should be different and extended from the one which is now set by the arbitrary decision of some airlines including Air India)

2. The structure of the new revenue base for the agents (transaction fee) needs to be worked out in detail with the airlines and a consensus arrived at with regard to the percentage of the transaction fee and its features which include answering the following questions:

a. % age of transaction fee
b. How it is to be shown on the ticket
c. How will airline charge the transaction fee in case of direct selling from its offices/ website
d. The role of airlines in direct selling and not undercutting travel agency fares

3. For the implementation part of the structure and to help travel agents across India cope with change in Business Models the following steps needs to be taken:

a. TAAI should get a detailed research done and project report developed by any of the leading Consultancy firm like PWC, McKenzie to help the trade body understand how such a transition in revenue base was handled in other markets and answer the following questions:
i. How the other markets handled such transition
ii. How will such transition affect the industry
iii. How can travel trade develop alternate business models / change in existing business models to accommodate such change in revenue base
iv. How can the TAAI as a trade body increase the acceptance and adaptability of this transition among the agents across India
v. How can TAAI and travel agents continue to work with airlines and agents increase their bargaining capacity with the airlines
vi. How can the travel agents retain their existing business
vii. How do travel agents compete with airlines (in case of direct selling by the airlines)

Such a research and project handled by a professional consultancy firm will give us an outsider’s view of the agency and how agents across the world handled such changes.

4. Cooperation / Interaction with travel trade bodies in other countries/ continents like ASTA in Australia and TIA in US to understand how they handled the transition from commission based structure to transaction fee based system. Following points can be discussed with them:
a. How change in commission structure handled by them
b. How have the travel agencies been affected by such change
c. How have they developed their business models to accommodate such changes
d. How has the transition as a industry been in light of these changes
e. How has the bargaining and relationship with airlines been affected

A broad based cooperation agreement is worked out with them and efforts made to form a global alliance of different travel trade bodies in the world that provide a global platform for discussing and research on common and specific issues concerning this trade.

5. TAAI should intensify its stir against the airlines which are non- cooperating and who are taking decisions affecting the travel trade in an arbitrary manner. Air India for instance made an arbitrary decision to cut the agency commission without an open discussion with TAAI. Trade bodies like TAAI should come up with circulars to all its members to blacklist such airlines and resort to “Gandhigiri” protest. For instance to protest Air India arbitrary decision making the TAAI should instruct its members to write “ISSUED UNDER PROTEST” on all Air India tickets by its members. The agents should also be advised to cut down on sales on such airlines. Airlines that are cooperating with TAAI and travel agents should be given preference and resultant circulars should be issued commending and recognizing these airlines to all its members.
6. TAAI should form a committee with airlines participation that is entrusted with the task of interacting with the agents at the local level (one committee with four teams for each region which should visit each state and its headquarters) to educate them on the transition from commission based structure to transaction fee based structure and help and guide them through this transition phase. The committee such formed should help agents develop / change their business plans and conduct an open house to dispel all their doubts regarding this transition
7. TAAI should set up a Helpline for travel agents at the National Level wherein a counseling and help regarding this transition is provided and agent’s queries are solved.
8. Each airline should be asked to circulate among all agents a detailed informative / educative circular pertaining to this change which includes how this change was effective and did not harm the industry in other markets. It should include the suggestions / measure how airlines and travel agents continue to work together and how this transition will not adversely affect the trade
9. TAAI in association with Airlines should conduct workshops / training programs (for a fee) which would help the travel agents get trained in skills that may be essential in developing ancillary services/ alternate business models. Like a short workshop on how to sell and develop holiday package products.
10. The revenue for all the above said programs/ measure should be raised by means of sponsorships/ affiliations from the airlines.

I would again reiterate that travel agents and trade bodies should not see this transition from commission based structure to transaction fee based structure as a threat to their survival; rather we should view this as an opportunity to reduce our dependence on airlines for our revenue base and base it on the services we provide. This will not only make the trade more professional and service oriented but also give each agent an opportunity to diversify its services and products and be successful in the long run.

India @ Beijing - Raping 1 Billion Aspirations

(Sum's angry on the poor look and feel of Indian Contingent at Beijing Olympics opening ceremony parade)

I consider myself to be the biggest fan of India (at any sport) and I cheer for my country at sporting events even when I know India in competing for the last three spots. But the sorry picture of Indian contingent at the opening ceremony of the Beijing Olympics has dampened my spirits for the event.

When I got back home from work, I considered myself fortunate for not missing the Indian contingent at the Olympic Sports opening parade. The grandeur of the event made me glued to the TV, sitting on the edge of my seat waiting for the arrival of “India”.

Meanwhile it was a treat watching other contingents in their national attires and I very proudly said to my Mom (I literally forced her to watch the event with me, as I told her anytime Indian Contingent would arrive in the parade) that the Best & the Most Exotic Dressed Contingent would be from India. As the contingents arrived from countries like Honduras, Kenya, Fiji, Japan, Spain immaculately dressed in their national attires and carrying loads of confidence on their faces my anxiety just grew. I was almost like a cheer girl from within waiting for my team to come.

As “India” was announced with a Chinese accent and the pictures of Indian Contingent flashed on the screen, it brought a sarcastic smile on my Mom’s face, as if she beat me to a game even without playing. I was crushed under my expectations looking at a small contingent represent ting a nation of 1 Billion dreams and aspirations (including mine). The men were dressed plainly in Sherwanis and the female were dressed as per their will. It was almost as if urban Indian female representing Youngistan were dressed in their ‘Hip” track suits and the traditional female athletes from small cities and rural background were wearing the traditional Saris. The contingent was clearly looking lost devoid of any confidence and the ladies looked as if they came out of a Saas Bahu soap opera, wearing different theme attires.

It must have been a big embarrassment for Sonia (Sonia not Sania…Sonia Gandhi Ji, I mean) waving at a small contingent with the female athletes heterogeneously dressed. To cover up I just told my Mom that actually Sania and Sunita are dressed in their tracks as they didn’t know how to tie an Indian Saari. But I was torn to pieces from within (the cheerleader in me was raped by the female Indian athletes) , and this is no exaggeration. India has lost the Olympics even without a ball being bowled. It is yet another case of India failing to rise at the world arena - "A Case of Lost Business Opportunity" in business parlance.

China showed it is made of stell and spent some USD 67 billion to showcase its rising status in the world arena and stamped it authority with dominance as a rising global powerhouse. Rise as a country not only means consitent growth in GDP figures, but it means much more to the people of the country including strengthening of socia-cultural infrastructure and sports is an important element of it.

I would give newspapers and TV a miss for the next fortnight fearing another nightmearish performance by Indians. Its the goof ups off field which put me off rather than loosing on the field with compretetive spirit. As I write this just heard "PMO intervened in Monika's case" and "Monika to go to Beijing", gggggrrrrrrrrrhhhhhhhhhhhh, what's going on India ? Politics in sports or Politics as a sport.

I stand for "Politics" to be included as a sport in next "Olympics" , for that is the only chance for India to strike Gold at this event.