The recent scuffle between airlines and OTAs in India over the latter’s use of 'opaque fare schemes' merely serves to highlight the ongoing tussle between the two parties over control of distribution.

For a period of two to three weeks in April, Jet Airways and InDiGo withdrew inventory from a handful of OTAs, saying the “opaque fares scheme” which allowed users to buy air tickets at basket sale price was unfair to airlines.

Airlines had inferred the scheme was used to hide the distressed inventory being offered by the troubled Kingfisher Airlines while MakeMyTrip had said in a statement it was “an internationally accepted practice used by airlines and hotels to sell their unsold inventory at a discounted price. This generally helps prevent sales of unsold inventory from adversely affecting full-price retail sales. The pricing and inventory is entirely controlled by the airlines and sold through their sales channels like OTAs.”

DhruvShringi, founder of Yatra, whoseYatra Supersaver was withdrawn from the site, said in an article in TechCircle.In, “The scheme benefits all. Be it the OTAs, the airlines and consumers. Opaque fare is a very consumer friendly scheme which is of great benefit for the flexible consumers. Though in India it covered a small percentage of sale of tickets, many global OTAs have followed this scheme and have grown considerably benefitting all.”

A compromise has since been reached with the OTAs agreeing to pull out the scheme.

Airlines and OTAs have long had a fractious relationship in India but observers remark this time carriers seem to have won the round.

Given the huge volume of business done at a site like MakeMyTrip which in FY12 reported a 65.5% YOY growth in revenues to $196.6 million (see full results below), it is estimated the scuffle probably cost it and the airlines several million dollars in sales.

The quarrel is symptomatic of a problem that’s looming in Indian aviation – the lack of capacity, with Kingfisher Airlines in trouble, and, as a result, higher air fares. Airlines are also having to cope with rising fuel costs.

MakeMyTrip’s Singapore-based chief business office-international markets, Amit Saberwal (above), declined to comment specifically on the recent incident but said that air demand could see a slight drop due to higher fares.

Despite that, he said the Indian story is still strong. “We may have glitches here and there, political issues, bad press, etc but the fundamentals of the Indian story remain strong. People want to travel and the mobile story – where only 150 million people have broadband connections but there are an estimated 700 million mobile connections – will make it even stronger.

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