Circular – IATA accreditation – financial guarantee – the way to recovery

Ref No: IAAI/ 076/BE/Circular

10th May 2021

Sub: IATA accredited travel agent – the way to recovery

Dear Members & Partners,

Greetings from IAAI.

The second wave of Coronavirus pandemic again hit sharply on air transport, and the whole aviation industry was affected- passenger traffic, air cargo demand, airport workforce and incoming revenues. Few travel agencies partially opened, many functioning from home. Agents consider IATA accreditations as a symbol of recognition to keep them globally alive despite volume or revenue.

Though we saw a ray of hope from January to March 2021, situations become so evil, worst and out of control. The second waves and the new variants not only downturn travel but also closed all offices as many state governments continued localized lockdowns /restrictions to curb the spread of infections. Schools and Colleges not functional.

The need of the hour is our survival. It’s time to rebuild with the future in mind—and the task begins upstream. Many of the building owners extended rent adjustments, rent deferrals, and contract extensions during the first wave. But today, during the second wave, nobody showing any consideration or sympathy due to the economic meltdown.

Today, furnishing the biannual insurance guarantee is a significant hurdle for agents, especially in the wake of the insurance provider IFFCO TOKIO had withdrawn their insurance guarantee. Agents left with either go for financial security through the bank or Associations joint guarantee.

For an IATA standard accreditation, the travel agent pays Rs 60,150/-per annum ((US$302.50+$480+$20 =US$802.50) to IATA as Accreditation & BSP Link charge. Or they are spending Rs 5,013/- monthly for airline inventory and processing. Plus, the expenses on a minimal financial guarantee for Seven and a half lakhs rupees – if through insurance costs a 3% premium, or travel associations’ joint bank guarantee, warranted pay off 9 to 15% on the assured sum as fixed deposits interest-free. And, all these expenses towards IATA are without any reciprocal benefits or revenue.

In the year 2020, from March, travel agents could not use or utilize these IATA facilities due to lockdowns and restrictions. The “Air bubble Agreement” and Vande Bharath Mission” further added regulatory controls. Neither IATA nor BSP reconsidered these facts, offered or extended any waive outs or discounts for the subsequent renewals in 2021.

In the wake of IFCO TOKIO withdrawal from the insurance guarantee, the IAAI director board has had an intensive study and research on IATA accreditations – Global (multi-country), Standard (with and without Easy Pay) and GoLite, its application, facilities and benefits based on following aspects:

• The “Air bubble Agreement” has curtailed the Sixth Freedom of The Air, and agents have to depend on VBM flights, controlled by particular vested interests.
• Foreign airlines stopped operations in India and banned passenger from India.
• Most states in India re-imposed restrictions, lookdowns and downsized domestic flights.
• The second waves and the new variants, globally downturn travel.
• A vaccine passport may be the future of travel. But all vaccinations not yet accepted globally.
• Countries like Australia closing borders till next year, maybe followed by many others.
• Non-implementation of DGCA Order No. AV.26012/2/2008-TE dated 5th March 2010, which mandates “commission” as the appropriate remuneration of travel agents.

Based on the IATA resolutions and within the Indian legal regime framework, the IAAI director board recommends that GoLite accreditation be suitable for average Indian travel agents.

• GoLite Accreditation is a Standard Accreditation with No-Cash Facility.
• GoLite agents do not have an annual financial assessment, as the requirement is minimal.
• No Financial security is required.
• Easy for Standard Accredited to change the accreditation model
• GoLite agents who wish to issue tickets on credit cards must register with IATA for a PCI DSS Compliance certificate.

Considering the above factors, we need to change our economic strategy to deal with the situation. Uncertainty continues and cannot rule out the possibility of a third wave. Until the majority of the populations vaccinated, the travel & tourism industry may likely remain in the dumps.

Hence, anticipating this situation may stand long, GoLite accreditation shall be suitable for average Indian travel agents in the present scenario. Go Lite accreditation is conducive to the Indian market conditions and the local requirements, unless and until they opt for consolidation or extensive /network marketing. A contingency program for survival as it may take one-two years to revive the situation.

In the current situation, IATA standard accreditation is a “White Elephant”. GoLite does not require any financial guarantee, BSP charge or financial risk assessments, except IATA accreditation fees. The agent is at liberty to retain his own IATA id number and free to book tickets, issue directly or thru other agents. There is no capping. Agents desire to use their facility, tie up the airlines, pay advance/ deposit money, or use credit cards PCI DSS Compliance Certification with IATA. And, when the situation backs to normal, the agent can change to the standard accreditation model.

Unfortunately, either travel agents, global councils, or any national or international associations ever raised, discussed or mitigated to get some exemptions to the industry.

The industry is at a critical stage, and many agents are wandering for survival. Recovery from the COVID-19 crisis is complex and a difficult task that needs a lot of effort, time etc. and could complete in a coordinated way with the full support of all stakeholders in the aviation industry. For more details on this new concept, kindly go thru the attachment: Golite – worldwide – webinar. pdf (Reducing Travel agents’ financial burden during Covid times) for your easy reference and guidance.

IAAI director board through online video conference discussed on 5th May 2021, and submitting as a proposal for your views and suggestions. Let us together, recover and re-invent our future.

Encl: Golite – worldwide

Regards