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Emirates has decided to revise IATA commission to a lowly 1 per cent wef April 1, 2017

This has come as a rude shock to the accredited Travel Agents Fraternity as they are the ‘prime strategic distribution channel for Emirates airline in India’. It was only the agents market support over the years that have placed Emirates in a dominant position above the National Carrier in the Indian skies.
Emirates passenger growth ex-India has grown from 1,525,220 in 2009 to 2,748,533 in 2015-16.

In November 2008, when Air India and Jet Airways initiated ‘zero’ commission in India, Emirates, headed by Mr. Orhan Abbas, the then ‘Vice-President – India and Nepal’, openly supported the Indian travel fraternity with 5 per cent commission on gross fare.

In return, The Indian Travel Trade, staunchly supported Emirates throughout the country to dominate and grasp the highest market share in the Indian skies. With 183 schedules per week, EK has become the best ‘agents friendly foreign carrier’ and were able to carry 651,831 passengers from India during the quarter October-December 2016.

Statutory and Regulatory requirements for Commission:
1. Aircraft Act 1934 Sec 5, Sub Para 2.(a, b).
2. The Aircraft Rules 1937 Part-1, sub pars 54A
3. The Aircraft Rules 1937, Rule 135-2 a & b – tariff DGCA Order of 5th March 2010 – Mandating commission & terming transaction fee as being against the Law.

4. DGCA’s Fresh Advisory on 17th Dec 2012 directing airlines not to change any fee/charges over the ticket fare.

5. Supreme Court Order of 23rd Jan 2013 barred charges (any nomenclature) over and above ticketed fare.
6. DGCA public warning on 13th Feb 2013 cautioning travelers not to pay any additional amount over ticket fare.

7. MoCA Order of 16th Sep 2013 – directed airlines to pay remuneration for any sales and transaction through agents or intermediaries.

Productivity Linked Bonus – Airline denying agency commission to ordinary agents are engineering and promoting consolidations and cartelization by providing upfront “cut and pay” policy for corporate deals and back-end incentives at 5-10 per cent are being provided as PLB (productivity linked bonus) under marketing promotional scheme to certain favored agents, consolidations & OTA (Online Travel Agents-portal).

The current commission level of 3 per cent is itself hardly adequate to cover the many overheads involved in running a Travel Agency resulting in a large number Agencies surrendering their IATA licenses while others have closed down their businesses considering it not worth their while with such low incomes.

The unilateral and arbitrary decision of Emirates to further reduce the Travel Agents’ legitimate commission to 1 per cent after 31st March is totally unfair and unacceptable. Even for this 1 per cent the Agent has to pay 15 percent service tax.

Our case WP25752/2013 and WA1136/2015 in the Hon High Court of Kerala for implementation, execution and enforcement of DGCA Order 5th March 2010 is now scheduled for division bench hearing on 25th May 2017.

The DGCA Order 5th March 2010 has categorically mentioned that:
• The quantum of commission should be based on various commercial factors such as the market conditions, the cost of agents, establishments, etc and the statutory definition of ‘tariff’.
• The commission cannot be replaced by transaction fee or PLB.
As such, the IATA Agents Association of India – Kerala State AGM held on 28th March 2017 at Trivandrum, unanimously decided to request Emirates to withheld their proposed reduction of commission from 1st April 2017 and retain the present level of commission at 3% gross or more till the Kerala High Court verdict.
In case of non adherence to above regulatory requirement, the AGM unanimously decided to withdraw its support to Emirates, and not to sell or promote Emirates or any of its ancillary services from 1st April 2017 onwards.

Consequently, it was decided that if Emirates do not comply with our request, the national board should appeal and request all trade partners, other partnering associations and related institutions to withdraw their support to Emirates. Also, decided to use public media and other Social Media to educate and inform the travelling public and make them understand not to fly on such non-friendly airlines.