`Illegal` for airlines to adopt zero commission system: DGCA
In an apparent setback to the air-carriers, the civil aviation regulator, Director General of Civil Aviation (DGCA), has termed the adoption of `zero commission` system by some of them as "illegal".
Mumbai: In an apparent setback to the
air-carriers, the civil aviation regulator, Director General
of Civil Aviation (DGCA), has termed the adoption of `zero
commission` system by some of them as "illegal".
In its submission to the Competition Commission of India
(CCI) in response to a complaint filed by a travel agents
body, the DGCA also said the commission should be part of the
"It is illegal for airlines to adopt a zero per cent
commission system which eventually leads to charging of
transaction fees from the passenger as a compensation by the
agent," the DGCA said in its submission dated May 12, 2010.
In fact, the agents should be compensated by the airlines
directly by paying a commission which should be a part of the
fare itself, it said.
Travel Agents Association of India (TAAI) in its
complaint to the Commission in February this year had alleged
that the action of all the airlines to opt for `zero
commission` simultaneously amounted to cartelisation which was
against fair business practises, and hence illegal.
After crude prices reached an all-time high of USD 149 in
2008 which impacted their operating costs heavily, both
domestic and some overseas air-carriers abolished the then
prevalent seven per cent commission to agents.
After widespread protests by the agents, while domestic
airlines restored the commission, albeit at a lower five per
cent, overseas airlines refused to do so.