In a recent mail vote of the Passenger Agency Conference, IATA airline delegates approved the enforcement of a globally aligned remittance period by mid-year.
Essentially, this will eliminate flexibility for local markets to set alternative dates through their Agency Programme Joint Councils (APJCs). These councils, comprised equally of local airlines and IATA-accredited agents, have historically set billing cycles and remittance timing in line with specific market conditions and the realities of local business relationships.
This new decision forces all BSP markets to adopt standard remittance periods at the end of each billing cycle, irrespective of whether local APJCs have previously agreed solutions that work for both airlines and agents.
The World Travel Agents Associations Alliance (WTAAA) has said it strongly opposes IATA’s decision and has warned that the move undermines local governance and jeopardises collaborative relationships between local airline and travel agent representatives.
Agent representatives also argue that it is unacceptable that a global forum – composed solely of airlines – can unilaterally overrule local arrangements reached through joint negotiations.
Under the BSP, IATA-accredited agents centrally remit funds to IATA, which then distributes them to the participating airlines according to their share of ticket sales. WTAAA said in a statement: “Shortening and rigidly standardising remittance periods results in agents having to pre-finance customer payments to a greater extent and to advance money to airlines before (corporate) clients have paid in full.”
Power imbalance
WTAAA added that the governance of the Passenger Agency Programme already suffered from a structural imbalance, as binding resolutions were adopted exclusively by airlines in the Passenger Agency Conference, whilst agents only had consultative status. “The removal of the local flexibility clause on remittance periods is seen as a clear example of how this imbalance can be used to override balanced local solutions painstakingly negotiated in APJCs,” said WTAAA.
Otto de Vries, WTAAA Executive Director, said: “By depriving national markets of their ability to tailor remittance schedules to local needs, the global alignment decision disregards long-standing local relationships between airlines and agents and ignores the operational realities of diverse business models, including high-volume corporate and tour operator accounts.” WTAAA has called on IATA and its member airlines to restore the possibility for local APJCs to determine remittance periods in line with billing cycles and their local financial criteria as has been their historical role.
