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)
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
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.
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.
No comments:
Post a Comment