Airfares to go up from Saturday


New Delhi : Yet another airfare hike is in the offing from Saturday with airlines and travel agents mutually deciding to add a new component, transaction fee.

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The transaction fee would be a minimum of Rs.350 for domestic and a maximum of Rs.10,000 for international passengers.

The zero-percent commission regime will be replaced by the transaction fee, which will be levied along with the airfare, said an official of an airline here, adding that this will be denoted as “other charges” on the ticket.

When asked, an Air India spokesperson in New Delhi confirmed that the new transaction fee will come in place from Nov 1.

Airlines in India have raised airfares at least six times this year.

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

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

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

Presently, air travellers are not charged any transaction or booking fee. Airlines pay 5 percent of the base fare as commission to travel agents.

But with airlines incurring losses since the first quarter this year, many international and domestic carriers have decided to write off commissions for travel agents, which is being resisted.

Agents are demanding postponement of the decision to scrap commissions till next March, but airlines have refused to oblige.

About 85 percent of airline bookings in India are done through travel agents, including online agencies.

According to O.P. Bahadur, a senior official of the Travel Services International (TSI) – a city-based travel and ticket agency and one of the eight big travel companies across the country that make up the Travel Agents Federation of India (TAFI) – airlines will pay travel agents the transaction fee on air tickets booked by them.

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

The new fee structure will ensure agents get better returns than before on the gross ticket value. The airlines have also agreed to print the transaction fee amount on tickets till December next year.

Demand, measured by passengers flown, had shrunk 3.8 percent from June 2007, said an airline official expressing apprehensions about further slowdown after another fare hike through the transaction fee route.