Agency defaults, disappears

MILLIONS of rands have
potentially been lost to airlines
after Durban-based agency,
Flight Junction, issued cash tickets
well beyond its Iata guarantee. The
agency’s Iata licence has since been
suspended.
TNW repeatedly tried to contact
Flight Junction but the company’s
phones were not answered.
Industry players told TNW that the
agency obtained an Iata guarantee
for R1,6m in April. After obtaining
it, the agency launched its website,
flightjunction.co.za, registered in the
name of Joseph Godfrey Pothaiah.
The website promises flights to
Europe from R1 110, flights to the
US from R3 120 and flights to the Far
East from R2 600.
The agency consistently ticketed
within its guarantee until November,
at which point sales suddenly
skyrocketed. After racking up a
massive airline bill in just one week,
with most flights originating outside
SA, the agency defaulted and its
Iata licence was suspended. TNW
understands that at least eight
airlines have been affected and at
least R7m has been ticketed by the
agency – R4m was ticketed out of the
US alone, while India, Morocco and
Pakistan are also affected.
Although Pakistan Airlines couldn’t
be reached for comment at time of
going to press, the airline reportedly
experienced fraud at the hands of
“a South African travel agent” in
November. An article in Pakistanbased
The Nation, said the scam
involved millions of rupees and
concerned the issuance of tickets on
nil-fare basis.
Asata ceo, Otto de Vries, said
the development appeared to be
a “classic case of an intentional
bust-out”. Otto explained that in
the event of a bust-out, the modus
operandi was for someone to buy an
entity that had a low-bank guarantee
with Iata. He said the perpetrators
wait for a weekend or off-peak period
to issue large volumes of tickets with
the intention of fraud and were also
generally not bona-fide travel agents.
He confirmed that Flight Junction was
not an Asata member.
Barsa ceo, June Crawford, says Iata
needs to put in place a more robust
mechanism allowing it to react more
quickly to this sort of thing so that
the airlines are not disadvantaged.
Unlike the Iata guarantee, default
insurance would in this case have
protected airlines. Jack and Seach’s
Charmaine Brogden told TNW that
when travel agencies were up to date
with their insurance but defaulted
on paying BSP, the insurance would
reimburse airlines. Jack and Seach
is the appointed agent to administer
Iata’s Default Insurance Programme
in South Africa. Charmaine said Iata
advised the insurer of any default
and if the final payment had not
been made, the DIP would intervene.
However, she warned that the DIP
should not be confused with fraud
protection insurance.