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23 January 2009
WHY SILKAIR SUPPORTS THE REFORM OF TRAVEL AGENCY COMMISSIONS IN INDIA
I would like to explain to you, our valued customer, why SilkAir feels that the reform of travel agency commissions is important. Before I do so, I would like to reiterate that SilkAir is open to have a dialogue with the travel agent representatives, and we are deeply committed to work together with them to build our businesses together.
Background
In the commission-based model, airlines pay travel agents a commission to sell their tickets, irrespective of the level of service they provide. SilkAir moved to a zero commission model from 1 November 08 because we believe that a ‘fees for service’ model, where a travel agent charges the customer a fee for the service provided, is more applicable to the nature of the travel industry, which is essentially a service industry.
Greater Benefits for the Customers
One of the key reasons why SilkAir supports the reform of travel agency commissions is to pursue a transparent ticket pricing structure, so customers know what they are buying. In the process, customers will also have greater control on the service they want to buy.
Around the world, the way customers buy airline tickets has been changing, and customers now have more choices than before. Airline call centers and the Internet provide you a direct way of buying a ticket. On the other hand, travel agents still provide a valuable service in assisting customers who prefer to make all their arrangements at once: hotels, tours, car hire, visas, transfers and the like.
In the commission-based model, airlines pay the travel agents a commission for selling tickets, irrespective of the level of service they provide to customers. In such a model, travel agents who sell only the tickets without additional services and travel agents who provide the full service options, will earn the same amount of commission from the airlines.
At SilkAir, we are committed to a transparent fee structure so our customers can decide what they want to buy and pay for the service provided. It is in the interests of the consumer that transparent pricing be implemented in India, as it has been elsewhere in the world. The transaction fee model is more transparent and gives you more choices. SilkAir believes that you – the customer – should be the one who decides the level of service you would like to enjoy and the services you would like to pay for.
Growing Businesses Together with our Partners in India
Our Indian customers are not the only ones who will benefit when travel agents move from the commission-based model to the transaction fee model. The new transaction fee model will allow travel agents flexibility to provide value-added services to customers in exchange of service fees.
Travel agents who offer their customers great service have nothing to fear from service fees – they may well earn more, as customers pay for better services.
At SilkAir, what matters to us is that we continue to provide you – our Indian customers – with great service at affordable prices. Service fees don’t threaten that – if anything, they make affordable prices sustainable into the future as you decide who you pay, and how much, for the services you buy. SilkAir is also keen to talk about the transaction fee model and work closely together with our Indian travel agents to make the transition a smooth one.
- Mr. Ahmad Zuhri, Manager India, SilkAir
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