Amadeus has temporarily reversed its implementation of the IATA Resolution 024a in the South African market, just a week after it came into effect.
The resolution, introduced on October 7, mandates that fares and excess baggage charges for international itineraries be calculated in US dollars (USD). In compliance with IATA Resolution 024a Attachment A, Amadeus initially applied the change, resulting in the Currency of Commencement of Travel shifting from ZAR to USD for all international journeys originating in South Africa. This affected all airlines, regardless of their original fare-filing currency.
Industry push back
Several airlines, who said they were not informed of the change, expressed concerns to IATA, objecting to the mandatory shift in the currency of commencement. Some carriers indicated that they intended to maintain ZAR as the currency of commencement until they made internal decisions to adopt USD and could communicate this change to travel agents.
However, the ruling is a global standard and cannot be selectively implemented at the discretion of individual airlines, says Caroline Smallwood, General Manager of Amadeus Southern Africa. “This change is a global implementation for all customers, whether in ZAR or USD. Amadeus cannot file fares in multiple currencies for the same markets,” she says.
“In Amadeus, the ‘Currency of Commencement’ under the new IATA resolution means that all international itineraries are returned in USD. The pricing process converts fares through the Net Unit Cost (NUC) system for international journeys, regardless of the initial fare currency,” explains Smallwood. “Fares filed in ZAR are first converted to the NUC rate (ZAR-NUC), then to USD (NUC-USD), before being converted back to ZAR (USD-ZAR) for sale.”
There are operational constraints when domestic fares are used in international itineraries. “For domestic fares used as add-ons in international itineraries as well as for domestic fares priced outside South Africa, Amadeus has operational fare filing constraints that are inter-dependent with the currency of origin. In both cases, the constraint is that all fares should be filed in either USD or ZAR for agents to price automatically and get rid of all currency discrepancies. Amadeus cannot file some airlines’ fares in USD and others in ZAR,” Smallwood says.
Next steps
Smallwood acknowledges that the shift was not well received by many airlines in South Africa. “We now understand this was not the expectation of many airlines and actors in the South African market and Amadeus regrets this whole disruption.
“We are working on a fallback and discussing the matter with IATA. We are pushing for IATA to publish the fallback to allow proper communication to those carriers who were refiled in USD,” she says.
Otto de Vries, Executive Director of the World Travel Agents Associations Alliance, says the decision to implement the resolution was not communicated to the South African market. “This is an airline issue, not part of the Passenger Sales Programme. Airlines wanting to file fares in USD should have informed their agents in advance. The lack of communication has shifted the exchange rate risk from airlines to agents and their customers, which is not how modern airline retailing should function.”
He adds that the GDS can’t currently handle fares in both USD and ZAR, something IATA overlooked.
Based on discussions with IATA, a difference of understanding is evident in the application of the resolution, he says. “IATA has proposed reviewing this during the IATA Pricing Automation Group meeting from October 29-31.”
