IATA has come out to make its position known regarding the dispute over length of credit cycles in Sri Lanka (TTG Asia e-Daily, July 9, 2013), pointing out that IATA “does not determine the remittance frequency”.
The payment scheme in question, IATA’s Billing and Settlement Plan, provides a standardised interface between travel consultants and airlines and removes the need for travel consultants to provide individual bank guarantees for each airline they sell for.
According to an email to TTG Asia e-Daily from Albert Tjoeng, assistant director of corporate communications, Asia-Pacific, IATA, changes to the BSP agency programme operated around the world has to be proposed by the local Agency Program Joint Council (APJC) and approved by the Passenger Agency Conference (PAConf).
APJC comprises an equal number of representatives from both airlines and consultants, and is authorised to consider all aspects of the agency programme and make recommendations to PAConf.
IATA, as secretary to PAConf, “does not determine the remittance frequency”.
However, Tjoeng observed that moving to a seven-day credit cycle would reduce the financial burden of travel consultants as a result of lower financial guarantee requirement from more frequent remittances.
Sri Lankan consultants benefit from a bank guarantee that is 23 per cent lower, while the figure is 28 per cent for small consultants.
Furthermore, the seven-day cycle would bring Sri Lanka in line with best practices in neighboring BSPs, such as Australia, India, Japan, Malaysia, Singapore and Thailand, countries already on a weekly or more frequent remittance cycle.
Tjoeng also highlighted that the enforcement of the seven-day cycle had already been postponed thrice: to January 1, 2010, January 1, 2012 and July 1, 2013.
The secretary of Sri Lanka’s Ministry of Civil Aviation met with industry representatives on July 10, and agreed to proceed with the implementation of the weekly settlement for BSP Sri Lanka from July 1.
Sri Lanka’s APJC is also to submit a new proposal to PAConf in October 2013 for consideration.
