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DGCA asking foreign carriers to pay fixed commission

New Delhi: The civil aviation ministry has quashed the order of sector regulator directorate general of civil aviation (DGCA) asking foreign carriers to pay fixed commission to travel agents in the country. In a veiled instruction to the agency the ministry has asked it to rectify its interpretation of Aircraft Rules.

The ministry in a communication to the DGCA head Nasim Zaidi has made it clear that foreign carriers cannot be forced to pay commission to the agents.

“There is no violation of any provision of the Aircraft Rules by the foreign airlines if they do not pay commission to the travel agents. It’s clear that the commission will form part of tariff only if it is paid, not otherwise,” the ministry has said in the communication.

The ministry has also said that there is no express provision in the Aircraft Rules making it mandatory for the airlines to pay commission to agents.

“The airlines cannot be asked to pay commission only on the ground that the commission figures in the definition of tariff,” it said.

The current definition of tariff includes commission to agents if airlines agree to pay.

Over 2,400 travel agents in the country under the banner of Travel Agents Association of India (TAAI), Travel Agents Federation of India (TAFI) and IATA Agents Association of India (IAAI) had been protesting against foreign carriers’ decision to scrap fixed commission regime. The agents had last year moved to Karnataka and Kerala high courts challenging airlines’ decision.

Following this the Kerala high court asked the DGCA to examine the issue and see if the foreign carriers’ move was in accordance with the law.

The DGCA later issued a directive upholding travel agents’ demand to reinstate commission. It, however, did not quantify the amount leaving it to negotiation between the two parties. None of the foreign carriers who had stopped paying commission have so far reinstated the previous model and continue to follow transaction fee model.

While the fixed-commission model requires airlines to pay a certain part of the ticket price as commission to agents, travel agents collect a fee ranging from Rs 200 to Rs 3,000 from passengers for booking the ticket. As per an estimate, nearly 85% airline tickets are currently sold through travel agents

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