Is scoring brownie points becoming more important than stated objective of growth and development? Over the years as travel has reached unprecedented levels, the Indian travel trade industry has also become bigger and overtly branched with myriads of associations trying to vocalize industry needs and concerns. However, a common voice or show over pressing issues remains vacillating. Result: a defeat on demand for commission against transaction fee and many others.
For long, the travel agents in India had been demanding five per cent commission from airlines. But at the height of the global economic meltdown, many airlines, including the British Airways, Singapore Airlines and Lufthansa, eliminated the agency fees as part of cost-cutting measures and asked travel agents to charge a transaction fee from passengers buying tickets.
Following suit, domestic airlines Air India, Kingfisher and Jet too announced a similar move. However subsequent to intense pressure from the lobby, they had to restore the commission, though at a lower 3 per cent. But in June, Air India, Jet and Gulf-based Etihad again triggered the issue by reducing it to 1 per cent.
The clamour from the agents’ lobby rose further to restore the commission to pre 1st Nov 2008 levels. The case was taken to Supreme Court that ruled out the option of transaction fee as “illegal”. This put agents in an even worse position, with no commission and no transaction fee and, heightened taxes from the government and its disinterest in according industry status to the sector.
This caused some to propose charging of a service fee equivalent to the reduction in commission fee yet a consensus remained elusive. All this on one hand and the government attaching little importance to Tourism in India with outbound segment being speciously seen as a channel of money seepage than a means to attract foreign exchange, on the other.
The image is unlikely to change much in this budget also keeping matters complicated.
Who to blame
But this is not an issue of voices falling on deaf ears. It is of lack of a united voice; of concurrence against commotion.
All along, even if the government and airlines played hard to get, so did associations among themselves.
Today, India has over seven major national level associations (TAAI, TAFI, OTOAI, ETAA, IAAI, IATO, SFTO) espousing individual merits. While they claim of a common goal – the betterment of the travel agents and travel industry, as a whole – on face, tell a story of disengagement, indifference and egotism.
India Tourism Review spoke to the heads of various travel associations to understand the internal state of the travel trade industry.
Former President of ETAA, Karl Dantas believes that there are huge ego issues among associations. “They (associations) have forgotten they are part of one big family and are too self-occupied. We need to come at a common platform. Right now we don’t even come at an event organized by another association. Industry members have to find common factors to bind them together and work together.”
Categorically stating, Dantas said that due to egoistical agendas, the travel trade lost the fight against zero per cent commission and supplants of transaction fee with the airlines.
“We lost our fight because of the very lack of consensus. Supreme Court said you cannot charge transaction fee, airline said you cannot take commission. Where will the money come from then? Service tax is pressing us hard already. You are getting taxed from all sides then your livelihood comes under threat!”
Dantas also believes that the internal strife and will to gain more representation over others is subduing industry’s voice. “Government has expectations from us to promote tourism. But here we don’t even speak in one voice. Who will take us seriously? The moment we’ll all speak in one voice, the government will hear us.”
Echoing him is Guldeep Singh Sahni, President, OTOAI, who says, “It is a separate battle that we keep playing and then we look small numbers. Time has come when entire travel fraternity comes together without the focus on who will take the credit and express solidarity,” says Sahni.
In a previous interaction with this Correspondent, Sahni had said, "Achieving our goal (to have industry status and service tax exemption) will be a long drawn out process achievable only if all the industry players act in one voice and not just focus on individual agendas”
For Subhah Goyal, President, IATO, continued irrational taxation on the tourism industry is a by-product of the very disagreement among associations. “It manifests itself in the resultant priorities of our decision makers. We could not raise a common voice from the industry partners/all stake holders as a team on the issue of taxation, the voice that could be heard by the decision makers. The resultant effect was that Tourism, in every successive budget, is taxed at the first given opportunity. We are discriminated against other foreign exchange earners of the country (like textile industry etc) where as tourism contributes quite a big amount in country’s foreign exchange earnings and job creation still we could not achieve our goal to get tourism declared as Export Industry and get all the tax benefits etc which are accorded to other export oriented industries.”
Goyal says that the industry failed to create a common voice. “Tourism does not get priority it should get in the National budget despite its job creating ability, revenue/foreign exchange earnings for the country, National integration, and global investment opportunities.”
Experts hint that inter and intra organizational calm is not immune to egoistical agendas and that internal cohesion can easily break loose in a developing sector if let to be so.
Influence of Airlines
Biji Eapen, President, IAAI, believes that submission to airlines and their interests played a role in discord building as well. “In India, airline dictates and agent members accept and endorse their requirements.”
“Agents were misled with “transaction fee” model and many thought that it as an easy process to mint money instead of a fixed commission. At many occasions, it was found that the IATA Resolutions were misinterpreted and misguided to the ordinary agents in India to the tune of certain vested interests. In other words, surrendered the industry to certain airlines.”
“Now the fact is that, when ordinary agents are denied ‘commission’ or the much glorified ‘transaction fee’, airlines still continue paying ‘special incentives’ to consolidators and OTAs under - PLB (Productivity Linked Bonus), 13-15 percent for front-end and back-end sales. We get “No commission” and “No Transaction fee”. Individually no agent can do anything. We are totally helpless.”
“Lack of proper coordination among trade stake holders is the reason for slow progress of tourism in our country,” says Goyal.
One body, one voice
Many of the current associations have overlapping agendas which is only creating competition, not unity. Yet none in the industry circles want a single appellate body. None want more than what there are already.
“It is too far-fetched to think that diluting all the associations would be a solution. It can’t and should not happen. Decentralization and compartmentalization is for the good,” says Dantas.
Sahni says, “Lets deal with the multitude of associations already in the country and not talk about yet another association.”
A source not wishing to be quoted said that recently created Federation of Association of Indian Tourism and Hospitality (FAITH) is treading slow in that direction as well and will have to prove any worthiness. It will be a show of seriousness for a common voice among various industry stakeholders, he said.
Need of the hour
There is a tacit acceptance of the dissipation and disarray the multitude of bodies has created. Hoping for a dilution of all associations into a single appellate body is perhaps unlikely but working together, chalking out strategies for a bigger goal is not. The realization needs to seep in early. Growth of the industry is good for all and this is yet not time to leave hands. Being at nascent stages, the industry is susceptible to external influences and imposturous agendas.
Wisdom is in staying together until a more meaningful and sustainable equation among industry stakeholder and concerned external authorities is achieved. And it makes even more sense around budget.