TRAVEL AGENCY A.
INTRODUCTION
A Travelling Agent’s services are well recognised by persons who are often travelling by car, train, bus or by air. Travelling Agent makes the travel a pleasure by arranging the travel ticket in advance at economic rates and offering good facilities during travel. With more and more people on travel for various reasons, the services of travelling agents are most sought after. B.
SERVICE SPECIFICATION & USES
There is no Indian agency which has prescribed a standard of service for travel agents. The International Air Transport Association (IATA) is the world organisation of scheduled airlines, which has prescribed certain requirements for one travelling agent to become an IATA approved agent. The details are set out in the Travel Agents Hand book and Guide to Automation which is published by IATA.
The rules have been
developed by airlines and travel agents and approved by all of the IATA member airlines. Any one wanting to become an IATA approved agent should obtain a copy of the handbook.
The IATA specifications deal with the premises, staffing, financial,
security, name, business standards, management and general sales agency of the travel agency C.
MARKET POTENTIAL
In India, according to a recent survey conducted, it has been observed that travel, transport and communication and health care expenditure is forming a comparatively larger proportion of household expenditure compared to food, housing and other items of expenditure.
The travel industry is becoming more prominent with the
implementation of fast trains, more buses and air transport routes & flights. The new roads and rail routes are also laid every year. The number of foreign tourists arriving in India also has exceeded 3.92 million per year. Besides this, domestic travel industry is also gaining importance with people going in for sightseeing, pilgrimage besides normal business purposes.
1
The projection for India for 2020 by the world tourism organization is 50 million. The figures indicate great potential for the travel industry. D.
TECHNICAL ASPECTS
1.
Installed capacity
A small travel agency with train & air ticket bookings can be started. The air tickets can be booked initially as a sub-agent to other IATA approved agent.
Later the travel
agency can qualify for an IATA approved agent. Initially, the train ticketing can be started along with sub-agency, for air tickets from other airline companies. The capacity is envisaged at 50 tickets per day for train and air ticket sales value of about Rs.15,000 to Rs.20,000 per day. 2.
Equipments
Travel agency office requires good communication system, telephones, fax etc, which will cost as follows. Rs. lakhs Office equipments – Telephone, Fax, Computer
1.50
Furniture
1.50
Other Misc. assets
1.00
Total
4.00
3.
Building
A rented building with 500 sq.ft area is sufficient to start a travel agency. The rent is assumed at Rs.4000 per month. An advance of Rs.40,000 is considered. 4.
Utilities
Power: Ordinary lighting load is sufficient to operate the office. Water: Water is required only for human consumption.
2
Man power: The travel agency can employ 2 experienced staff. A monthly salary of Rs.4000 is provided for each employee. 5.
Implementation Schedule
If suitable location is identified, and the finance is arranged, the project can be implemented within one month’s time. 6.
ASSUMPTIONS
•
No. of train tickets booking per day is estimated 50 tickets, this works out to 15,000 tickets per annum. Service charge rate is estimated at Rs.25 per ticket.
•
Air ticket booking value is estimated at Rs.50 lakhs per annum. Service charge rate is estimated at 3%.(Sub-agency from other agents)
•
Salary for 2 employee is assumed at Rs.4000/- per month each.
•
Rent is provided at Rs.0.48 lakh per annum.
•
Power charge is estimated at the current rate which works out to Rs.0.12 lakh per annum.
•
Printing & stationery expenses are assumed at Rs.0.60 lakh per annum.
•
Travelling & conveyance expenses are estimated at Rs.30000 per annum.
•
Telephone charge is assumed at Rs.24,000 per annum.
•
Other Misc. expenses are estimated at Rs.30,000 per annum.
•
Depreciation is calculated at WDV method.
EQUIPMENT SUPPLIERS Office equipment suppliers are locally available. LIST OF FURNITURE SUPPLIERS 1. Supreme Furniture, Hunters, No.42, Sembudoss Street, Chennai 600 001. 2. Ajanta Funiture, No.265, Roypettah High Road, Royapettah, Chennai 600 014.
3
COST OF PROJECT AND MEANS OF FINANCE 1. COST OF PROJECT
[Rs.lakhs]
Land and Building (Advance)
0.48
Equipments
4.00
Pre-Operative expenses
0.50
Working Expenses
0.50
Total
5.48
2. MEANS OF FINANCE Capital
5.48
Term Loan
0.00
Total
5.48
The entire finance is considered as promoter contribution. The Travel Agency does not enjoy any priority for finance by bankers 3. COST OF SERVICE & PROFITABILITY STATEMENTS Years
1
2
3
No. of Train tickets booking
15000
15750
16538
Air Ticket booking value (Rs.lakhs)
50.00
50.00
50.00
Income details
Service charges rate: For Train ticket booking
Rs.25 per ticket
For Air ticket booking
3% of ticket value
Service charge income: (Rs.lakhs) From Train ticket booking -- (a)
3.75
3.94
4.13
From Air ticket booking -- (b)
1.50
1.50
1.50
Total Income per annum (a+b)
5.25
5.44
5.63
Salaries
0.96
1.01
1.06
Rent
0.48
0.50
0.53
Electricity
0.12
0.13
0.14
Printing & Stationery
0.60
0.63
0.66
Expenditures
4
Travelling & Conveyance
0.30
0.32
0.34
Telephone charges
0.24
0.25
0.26
Other misc. expenses
0.30
0.32
0.34
Depreciation
0.40
0.36
0.32
Total expenses
3.40
3.52
3.65
Profit Before Tax
1.85
1.92
1.98
Provision for tax
0.03
0.04
0.05
Profit After Tax
1.82
1.88
1.93
4. PROFITABILITY RATIOS BASED ON 80% UTILISATION Profit after Tax
1.93
Income
5.63
Profit before Interest and Tax
2.30
Total Investment
5.48
Profit after Tax
1.93
Promoters Capital
5.48
5. BREAK EVEN LEVEL Fixed Cost (FC):
[Rs. lakhs]
Wages & Salaries
1.06
Rent
0.53
Depreciation
0.32 1.91
Profit Before Tax (P) BEL =
FC x 100 FC +P
1.98 1.91 1.91+ 1.98 49%
5
of installed capacity
34%
42%
35%
