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Tourism industry in India is currently going through a turmoil, battling the crippling double whammy of a hike in the service tax in the recent national budget from 10 to 12 per cent and a new tax on airline fuel. Besides, the withdrawal of credit card pass through facility, traditionally extended to the travel agents is now being withdrawn by Air India. Three domestic airlines are demanding weekly payments in place of the earlier fortnightly payments from travel agents. These changes together threaten to deal a death blow to this sunrise service industry of the country, according to Iqbal Mulla, president of the Travel Agents’ Association of India (TAAI), who has called for a roll back of the service tax and deferment of weekly payment.
“Travel agents are an important marketing arm of airlines,” said Mr Mulla recently in Mumbai. “Foreigners who come to India seek the services of travel agents for facilitating their travel and stay in India. Corporates seek travel agents for convenience and efficiency as they know the ins and outs of the business and are hence able to deliver the best results in a short while. They are professionals with the expertise and domain knowledge that makes them the backbone of the travel & tourism industry.”
The increase in service tax is going to make traveling more expensive to the customers, just when the holiday season is about to start.
Saddled with financial problems, some airlines are trying to cut corners by withdrawing the commission that they traditionally paid to TAs. Some are also withdrawing the credit card pass through facility. Indian air travel business has always been widely supported by credit system, but now with the new system in place, corporates would be required to make payments in advance or at a short notice, which could amount to a breach of contract they have with the travel agents.
“The loss of commission, the withdrawal of credit facility and the weekly payment schedule by the airlines could perhaps drive 50% of travel agents to shut shop, adding to unemployment and reduction of foreign earnings to the nation,” said Mr Mulla. “The airlines should support travel agents as they are an important source of bringing in more than 80% business for them, and a means of enhancing their productivity and marketing efforts. Instead they are wrecking the travel agents’ business to their own detriment. This amounts to killing the goose that lays golden eggs for the travel-tourism industry in India.” he said.
Mr Mulla stated that TAAI and TAFI, the two major travel and tourism associations have come together on a common platform to take up the Air India issue to its logical conclusion.
TAAI has also approached the Directorate General of Civil Aviation (DGCA), and the Ministry of Tourism and Ministry of Finance, Government of India, for a roll back of the service tax and deferment of weekly payment for the betterment of the travel and tourism industry in India.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
