An Open Letter to the Travel Agent Community – IATA

An Open Letter to the Travel Agent Community - IATA
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The global airline industry is going through its gravest crisis. The COVID-19 pandemic and resulting government ordered border closings and mobility restrictions have brought air transport to a standstill. One-third of the global
fleet is parked, and we estimate that revenue from passenger ticket sales will fall 44% this year compared to 2019.

As the operator of industry financial settlement systems that in normal times process more than $1.25 billion in industry funds every day, IATA faces the enormous responsibility of maintaining the security and integrity of these systems during a period when far more cash is exiting than is coming in.

At the same time, we know that our members and business partners rely on us to recognize the extraordinary challenges they are facing and to show as much flexibility as possible under the circumstances. We are doing our best to meet these expectations without risking the viability of the systems that are the financial backbone of the industry

For travel agents, this means we’re allowing settlements to be made a bit later, without penalties. While remittance periods have been kept in accordance with BSP Calendars, we are taking a flexible approach and preliminary figures confirm this, showing that default rates in 2020 are a bit below the year-ago period—despite the stresses on the system in 2020.

Further, we are allowing agents to continue selling—using secure methods—even when they are late with remittances.

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We also recognize that in today’s environment, when it may be difficult to impossible to get audited financial statements, or arrange a financial guarantee, we are offering to extend deadlines for these statements by up to a month.

IATA continues to welcome your suggestions on how we can be more responsive in these areas.

However, on the issue of airlines withholding ticket refunds in the BSP, or issuing vouchers in lieu of refunds, I’m afraid that the message I have to deliver is not one that will provide comfort. Our industry is experiencing a critical liquidity crisis. Most airlines are spending more cash in reimbursing their passengers than they receive in
new booking revenues. We recently estimated the industry’s liability in this area at $35 billion. In this context, airlines’ most urgent need is to keep their remaining liquidity to pay salaries and face their fixed costs. It is practically impossible for industry players to find sufficient financial means to keep the air travel value chain operating in the short time that airlines have before facing bankruptcy.

In this context, we believe the best answer for both airlines and travel agents is for regulators to ease requirements for cash refunds and allow airlines to issue vouchers instead. These vouchers can be managed through the IATA Billing and Settlement Plan (BSP) using processes and procedures that already exist today. This would remove the pressure that is currently on agents to issue cash refunds at a time when airlines are making decisions based on their own need to preserve cash. IATA is willing to engage in open and collaborative discussions with the travel agency community represented in the Passenger Agency Programme Global Joint Council to formulate a structure for these vouchers that will bring value for airlines, travel agents and consumers.

We are grateful that regulators in Canada, Colombia and the Netherlands have recognized the necessity of this approach and we hope others will do the same.

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While I know that this is not the answer that you want to hear, it’s important that you understand that IATA is working hard to find a solution to this problem that will enable us to endure and move forward. People want to travel, for the horizons it broadens and the connections it enables and maintains. These are dark days for our
industry, but we are resilient, and we will get through them, together.

Alexandre de Juniac
Director General and CEO
International Air Transport Association

(Source: IATA)

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10 Comments

  1. I think the director general need to take a look at the other side of the coin.. As a customer who who has laboured for their money.. To be told by an airline that they are not entitled to a cash refund through no fault of my own is at best selfish and inconsiderate. To then be offered a worthless voucher with an expiration use by date is the very height of a corrupt practice and greed.. imagine for a second the average consumer, who have had to work 4 months to save up to bring their family lets say, from south Africa to UK. Having also fell victim of the current covid19 pandemic resulting in their flight cancellation from for instance, Emirates airlines. What use is a voucher to the family if the next and only available airlines Willing to travel that route a week later is KLM. Do you expect that the family work another 4 months to save up before purchasing a new travel tickets while the voucher sits in the junk mail? That would absolutely results in a complete breakdown if consumer relationship with any such airlines with such practice .. Not to mention not ever using the air carrier again. Perhaps the director general should take some more time out to reflect on his position again and greater impact such decision will have on the day to day air travel user. Exchange of voucher for money especially a voucher that has a used by date is useless and greedy..

    • Considering that very few agents will show a profit this fin year due to the huge numbers of cancellations and refunds, will IATA show leniency and not make otherwise profitable agents have to provide expensive bank guarantees for the next fin year?

    • I 100% concur with your comments, Raf, because I read through the IATA CEO’s letter over and over again but I couldn’t make any sense out of it. It’s just like robbing Peter (customers) to pay Paul (airlines staff) which is not only selfish and greedy but heartless, wicked, exploitative and blackmailing.
      However, in a report by Simon Calder titled “Coronavirus: Emirates to Stop Flying Most Passengers Amid Pandemic” which appeared on Sunday 22nd March 2020 in online edition of UK’s Independent, the following was mentioned in the last paragraph and I quote,
      “While jobs have been protected, staff have been asked to take a pay cut of up to 50 per cent – with top executives giving up their basic salaries completely.”
      Hence, where did the IATA CEO get the narrative implying that the airlines have to pay salaries at the expense of customers that bought tickets but covid-19 pandemic stops the air travels?
      The fairest thing to do by the airlines is to give customers, at least, two options of refund: cash or voucher. Anything short of that is like saying, “customers you’re the ones who created covid-19 pandemic and you’re going to pay for it by not getting any cash refunds from us but voucher refunds only!” To say the least, that’s crazy! Maybe the IATA CEO needs to be reminded of customers like me who had to save for good 10 months to travel with my spouse this month, knowing I hardly can get another suitable and convenient time for the next 2 or 3yrs. And now you’re telling me this. Imagine! My advice to all customers who have bought tickets like me is to use any means legally possible to get our cash refunds, whatever that means. Period..!

  2. Please when is the refund going to be ready?

  3. Dear IATA, I suppose the issue of switching cash refund to consumer with voucher is not favorable in any way. If the Agency remittance to the IATA/Airlines will still be made on cash and not voucher as propose on consumer refund, I will urge IATA to look into this matter, so as the Agency and consumer will not feel their interest is not protected and considered. Remember all these revenue are generated through consumer via the Agency and other means available. So please let be sensitive, so as to gain the confidence of borh parties.

  4. Issuing voucher against refund of tickets are the best option and this can be utilized while buying new tickets. If airline could give a time limit of using voucher for a period of one year, will be welcomed by all I think.

  5. IATA director’s suggestion of refund vouchers to passengers indicates his interest only to protect th airlines by looting th passengers. most of th passengers go on tours may b once in 2 or 3 yrs. in th present scenario of no job guarantees nd no proper salaries, who can afford to go on a tour within a year? th IATA’s suggestion of refund vouchers suits only frequent flyers nd not others. some would have bought tickets to fly for a specific purpose wch wl not b served at a later date. every business is experiencing set back but v cant make th consumer pay for our losses.

  6. I think generating vouchers with a time limit is not the solution for this ,airlines must think about the passengers and agents who are the biggest victim . How much loss every individual is facing. Airlines is just thinking about them and there future what about there customers. I think airlines must think about there customers and refund all the amount paid by them. In this bad time we kindly request airlines to not be selfish and please consider passenger and agents request and generate full cash refund.

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