With the impact of the COVID-19 pandemic continuing to have a major impact on the travel industry, agency owners and managers are still slicing costs, shaving overheads and reviewing their operations. The next steps will be a careful balancing act – keeping the business going and planning for the future.
Sean Kritzinger, Chairman and Co-Owner of Giltedge Travel Group, told Travel News that reduced debtor exposure had been an important change in the way Giltedge did business. “We reduced our 30 day debtor accounts by 90% and implemented additional travel lodge cards within our corporate portfolio. We have also introduced weekly and fortnightly accounts and retainer deposits for those clients.”
Kritzinger says the introduction of retainer deposits and weekly and fortnightly corporate travel billing has helped considerably and enabled better cash flow within the group. “Fortnightly BSP submissions have had no real impact due to reviewed and reduced debtor exposure. We have reduced our Iata guarantee but have only managed to lodge our own agency travel cards with some airlines.”
Transparency in Payments (TIP) is an industry initiative by Iata, which, if an airline consents, explicitly allows travel agents to use their own credit cards and allows them to take advantage of new forms of payment for the remittance of customer funds to that airline, airline by airline. Otto de Vries, CEO of Asata confirmed that global adoption of TIP was only 1,75%. ”Of the 149 markets listed, 75 have some level of adoption but, other than India, no market shows significant adoption of lodged cards. So effectively, agents using their own card is not even available or applicable in 50% of the markets. It is a total failure.”
Gary Mulder, CEO of Club Travel, told Travel News that while the group did still offer credit to many corporate and government customers, things had been tightened up, and the group had put considerable effort into reducing credit periods. “By limiting our exposure to pre-payments and by using lodged credit cards for payments, we have ensured reduced risk,” he told Travel News.
Mulder says by reducing the group’s exposure to credit terms on air tickets, it has meant that fortnightly BSP submission has not had a major impact on Club’s business. Club Travel still has an Iata guarantee but has not lodged agency credit cards with any airlines.
Mulder explains that payment structures at Club Travel have been adapted to facilitate better cash flow under COVID and restricted travel. “This is a constant improvement process for us and we do have some exciting plans here that we hope to roll out in Q4 and into 2022. For now we have tightened up on credit terms with customers to ensure that we can manage our cash flows better. We cannot be expected to play bank and be out of pocket for our customers.”
