Praveen Chugh, president – Travel Agents Federation of India (TAFI), shares his views with Reema Lokesh on the current business scenario
As an industry expert, what are the changes in the business of travel since your previous tenure?
Since my last tenure as president of TAFI, way back in 2010, the travel business has undergone several changes, few of these favourable while the rest were mostly unfavourable to agents. The travel industry, at the moment, is overstressed with various changes been done to the direct and indirect taxation grid by the Indian Government, especially the Service Tax. Low cost carriers (LCCs) have captured a major share of the overall pie thus putting travel agents in a tough financial position as valued corporate customers enjoy same credit facilities, usually varying between 30 to 45 days but on the other hand a travel agent has to prepay the LCC for future business. This apart, IATA, the focal body of the travel industry, has reduced the fortnightly credit period to weekly settlements. Airlines are also becoming strict on their internal policies and travel agents’ profits are shrinking. These days in order to sustain the goodwill and presence among market competitors, the travel agent can be asked to furnish both bank guarantee and insurance coverage. All these factors reduce down the gross earnings of the travel agent. The retail business has been hit hard with focus shifting to OTAs.
Is there a renewed vision under your leadership to address the challenges of today?
Travel and tourism in India is a highly-taxed industry, which makes India an expensive tourist destination. Various taxes are levied across the entire industry which include service tax, luxury tax, tax on transportation, tax on aviation turbine fuel (airline industry). For the survival of this industry, there should be considerable reduction in levy of taxes. In order to lessen the financial burden, use of credit cards in meeting the weekly settlements should be encouraged. It should be borne in mind that travel agents are only consultants and not financiers. Moreover, lot of funding is being inducted from overseas and the market competitors are playing valuation games making old time agents suffer due to low profits.
What is your primary goal as president TAFI?
As president of TAFI, my primary goal would be to see that each and every member should get adequate ticket stock; that there is parity between the agents and the principals, be it airlines or hotels; minimum competition in order to maintain stability in the market; considerable relief from heavy taxation; the end user should get maximum benefits while striking travel deals; and the fruits of technological advancement are made available on a single platform.
Are there any special benefits that a TAFI member enjoys?
Active members can make use of TAFI logo in their day-to-day activities. A Joint Bank Guarantee Scheme has been introduced to reduce the cost, make the members more professional and at the same time educate them on how to work on greater margins.
Any plans for a future convention post Israel?
TAFI conventions help members enhance their networking and expand their business as well. It is well known that TAFI is famous for exploring new convention destinations by way of increasing to and fro tourist traffic between countries. We are in the process of looking for various exotic convention avenues.
Do you think the travel agents of today need to re-look at their business strategy?
I would like to emphasise that travel agents should introduce technology – savvy systems in conducting their day-to- day business and encourage the use of credit cards by their customers since they would be getting credit from the banks while agents will get their payments immediately.