I firmly believe that Right to Mobility and Right to Transportation must be made fundamental rights under the constitution. When I wrote this yesterday I genuinely felt sick & tired of this go - no go over restarting flight operations. It is strangely ironical that prisoners are being released due to Covid and rest of the population is being imprisoned. It is suffocating to have your freedom snatched away and to see the anguish of so many business associates and friends. The Covid Crisis has become a humanitarian crisis and this is not good. There may be more crises in future and laws must be made now. We cannot let this happen again.
Regarding Aviation, there is some forward movement today with resumption of truncated domestic flight schedules wef 25th May 2020. In the near term for travel until 31.12.20 and until all airlines start operating full domestic schedules filed by them, the MOCA & DGCA must step in to regulate pricing norms and protect slots of each airline. I understand that it would be an extraordinary step but we are in extra ordinary times. However a tough regulatory framework needs to be set up quickly to govern these norms because left to themselves Airlines will once again revert to flouting DGCA norms as they have been doing for several years and did recently by forcefully withholding passenger refunds. Tax payers’ money and statutory taxes are not interest free loans for airlines and they need to be returned judiciously. A disciplined controlled working framework is better than any bailout once again with tax payer money.
Regulation is not about protecting loss making or smaller airline operators but also about ensuring that profit making airlines stay profitable and about protecting consumer interest. What’s wrong with this idea as a short term measure? Nothing.
Closely associated with the fate of the airline is the fate of the entire Hospitality, Travel & Tourism sector. The logical next step is that hotels open for business which is great for local and regional tourism to begin with.
Now Low cost airlines must immediately take steps to address the concerns of the travel agency and tour operator community by releasing their entire deposit amounts and commission payments without any further delay. The full service carriers also must immediately release the refunds and commission payments. Airlines do have access to bank loans and this is the least they can do to cushion their distributors. This action must be taken unanimously without any discussion & debate as travel agents and tour operators who are key stake holders urgently need working capital to save jobs and their businesses.
What are the proactive other steps the Indian Government can take immediately to boost Indian Aviation & Tourism sector
- Mandate the full service carriers to pay a standard commission to travel agents as the Low cost carriers do.
- Launch non refundable Government fares to be used for Government or Government sponsored travel – International & Domestic. These fares must ideally be valid for travel on India based carriers only. Many countries have these fares in place and so should India.
- Cancel TCS to keep Indian Tourism industry competitive
- Reduce GST on air tickets to a flat fee of maximum of 2-3 % and disallow input credit on air tickets. GST reconciliation is a monstrous task to administer and implement for the travel agencies and the Airlines and it involves substantial avoidable cost. Such a move will also reduce the cost of air travel and improve overall efficiency of travel agencies. More importantly it’s on record that the government has no way to determine whether purpose of travel is business or pleasure or if even necessary. It is also confirmed that the government does not have any access to relevant data nor does it store such data of millions of transactions each year so best to do away with input credits and lower the cost of air travel for the general public.
- Ensure compliance of CIVIL AVIATION REQUIREMENTS SECTION 3 – AIR TRANSPORT, SERIES‘M’, PART I, PART II, PART IV
Travel & Tourism industry also needs to self regulate. I am appending below excerpts of my article The Need of the Hour – Course Correction & Risk Management published on LinkedIn on 11.4.20
With regards to distributors, in my humble opinion, the immediate steps the distributors need to take are as follows:
- Establish a portal to post any defaults by customers – be it agent or corporate or individual passengers? No Ticketing Agent, Tour Operator or Non Ticketing Agent should deal with defaulting customers. This will ensure fair play and very quickly customers will begin to comply with payment deadlines. If airlines can ban passengers for misconduct & IATA can declare defaults, why can’t the agents and operators do it? The trade associations need to define default criteria and implement it immediately as administrators.
- TIDS numbers must be made mandatory to access content for all Non Ticketing Agents. I believe this will weed out the fringe players who are not professionally qualified travel counsellors.
- TAs should accept back end incentive targets from airlines on net ticketed volumes – not on flown revenue and payable quarterly on a pro rata basis. Flight cancellations by airlines for whatsoever reasons must be discounted for calculating target achievement. This must be non negotiable
- Do ask for hotel & car bookings each time you book a ticket but do not buy prepaid hotel rates. Book on GDS at commissionable rates. Give customer card as a guarantee and let customer’s pay@hotel. Like Airlines, Hotels & Car Rental companies including aggregators can also load private rates on GDS for you. In the long run and for risk mitigation, commissions are far better than mark ups and global TMCs normally follow this policy for good reasons.
- Focus on smart contracting with suppliers. Contracting has to be by far the most crucial function especially now.
- GDS companies need to keep a sharp focus on Non Air bookings and facilitate growth of this segment with more local content and subscriber awareness programs. Non Air bookings on GDS can be a very effective source of ancillary revenue for the travel agent
One good thing about a crisis is that it brings people together, leads to creation for a common cause. I believe the sheer magnitude of Covid 19 will divide modern world history between two time zones BC & AC. The beauty is BC is "Beyond Control" and AC is what we will “All Create". From my point of view we have a huge opportunity to make a better world in every sense.
This article is written on 20.05.20 primarily in context of India