Agent commissions get the boot
Cutting costs has become an imperative for all businesses in an era of inflation. Trying to tide over increased operating costs by raising prices has become a no-no. Ask the domestic airline players and they will tell you that they till last year had a passenger capacity utilisation of 73 per cent, which fell to the current levels of 63 per cent after the hike in fuel prices. It is now likely that most airlines are likely to reduce capacity on their loss-making routes to step up yields.
The latest move to cut costs have been directed at doing away with agent commissions. After national carrier Air India, other full-service carriers—Jet Airways and Kingfisher Airlines—are moving towards a zero-commission structure for travel agents. These carriers are expecting to save around Rs 1,000 crore as commission payments to travel agents on air ticket sales. Air India and Jet Airways are expected to net Rs 450 crore each and Kingfisher will save up to Rs 100 crore.