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| Travel agents to continue Airblue boycott over commission |
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Tuesday, June 24, 2008
By Saad Hasan
KARACHI: Travel Agents Association of Pakistan (TAAP) on Monday vowed to maintain the embargo on the sale of Airblue tickets fearing that any relaxation will encourage other carriers to reduce their commissions as well.
In a general body meeting held here, members of the association said the private airline since June 3, 2008, increased fuel surcharge but decreased travelling fare, which is used to calculate fixed margin of agents who in reprisal stopped selling its tickets.
“An airline calculates its fare structure on basis of total expenditure including fuel surcharge and travel agents earn commission on that fare value,” said Tahir Sheikh, Regional Chairman TAAP. “And on this commission we pay withholding tax to government.”
He said change in mechanism to calculate commission has not only reduced profitability of travel agents but decision will cost government taxes. TAAP claimed that its members paid Rs240 million to government in taxes on sale of Air Blue tickets.
A committee of TAAP members, he said, has been formed to negotiate with Air Blue. “But we will not cooperate with them on their terms.”However, there was a clear divide between the members as top leadership of TAAP stressed that few members have not adhered to boycott of Air Blue.
Rafiq Khan Bukhari, one of the biggest travel agents of the country, insisted that a boycott will not help association meet its demands but said since he has announced support for TAAP he stands with its decision.
“Air Blue is willing to cooperate,” he said, adding that TAAP should not close doors for negotiations.
This contention arises from one of the steps the private carrier has taken to cut cost as fuel prices soar to record level and airlines world over struggle for survival. Besides cutting commission of travel agents, Air Blue has reconfigured all its aircraft to complete economy-class model and replaced full-meals with sandwiches on domestic flights as part of controlling expenditures.
Its Managing Director Syed Nasir Ali said airlines elsewhere are also separating fuel surcharge from basic fares. “When we started the airline in 2004, fuel was 30 percent of our total expense. Now it is 70 percent.”
He said on June 2 the jet fuel price was increased by Rs11 per litre, which is the highest increase ever and airline decided not to pass the burden to passengers as this will shrink the market.
“When they boycotted us, we directly approached customers and we have not faced any reduction in sales,” he said, adding that non-IATA (International Air Transport Association) travel agents are still marketing Air Blue tickets.
He said the notion that government will face losses in shape of fewer taxes is not entirely correct as airlines pay taxes on fuel surcharge and basic fares both. Pakistan International Airlines (PIA), which is facing mammoth financial losses, is the only airline to include fuel surcharge in face value of the ticket.
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ISSN 1563-9479 
