Following reports that agents were struggling to secure alternative methods of financial security after DIP insurance withdrew from the market, Iata offered a 10-day extension to all agents that were still working to provide the association with security. While this extension came to an end in September, affected agents have told Travel News the additional leeway, and some extra assistance from Iata and the banks, had given them the time needed to find workable solutions.
Owner of Travel with Attitude, Martin Wheeler, told Travel News last month that he was concerned that he would lose his Iata licence of 37 years after running into numerous dead ends in his attempts to find an alternative method of financial security for Iata before the September 18 deadline. Martin, like one-third of all South African agents, had previously used DIP to secure his Iata licence. Not only was Iata’s Global Default Insurance (GDI – a similar produce to DIP offered by Euler Hermes) not accepting new applications due to the pandemic but Martin’s applications to three banks requesting that they hold his funds as a guarantee for Iata were also declined due to an impasse between Iata and the banks over Iata’s guarantee template.
See: https://www.travelnews.co.za/article/iata-immovable-bank-guarantee-impasse
When Travel News followed up with Martin to find out if he had managed to secure a form of financial security to maintain his Iata licence before the deadline ended, he reported that he had finally come right.
“After the previous article was published I was contacted by Nedbank who managed to dig around and find an Iata template that had been approved earlier in the year. They discussed the matter with Iata who agreed to accept the earlier template. The R250 000 guarantee has now been secured in an interest-bearing investment account, which Iata says meets with its requirements. Sadly, I had already paid across a further R250 000 to Iata as a temporary non-interest-bearing security deposit before the 10-day extension was announced – I didn’t want to find myself up a creek without a paddle – which has meant that I now have R500 000 tied up in guarantee security. We got there in the end though and I have been able to hold on to my Iata licence. I understand that Iata will refund my deposit once the Nedbank guarantee has been officially confirmed,” said Martin.
Iata spokesperson, Perry Flint, confirmed that Iata had offered the 10-day extension to all agents that were previously on DIP. This was in addition to the six months’ notice that all agents had received for the withdrawal of DIP.
“Iata values our agent partners and will try to work with them to enable them to continue to participate in the market,” said Perry.
He added that these were extraordinarily difficult times for all participants in the air transport value chain and said Iata recognised the special challenges being faced by participants in the South African travel market.
“We also have a responsibility to our members to ensure the security and stability of our financial settlement systems. While the requirements for an Iata-compliant bank guarantee may be stringent, it also enables the agent to participate in the Iata Agency Programme and BSP and prevents the need for bilateral bank guarantees with each individual airline.
“If an agent is unable to obtain the financial securities required within the six-month timeframe that was provided there are still a few options:
- If they need to talk to Iata about their individual situation we will review on a case-by-case basis and see what options we can offer them, such as, in some cases, the agent providing a cash deposit.
- The agents can temporarily continue operating under an accreditation model (i.e. GoLite) where they can use Iata EasyPay for their cash sales and also continue trading with credit cards, until they can find a solution to their financial securities; The GoLite accreditation model does not require a bank guarantee and allows continued trading in the meanwhile.”
A Nedbank spokesperson advised that they had assisted Martin after engaging their legal department to scrutinise the wording required by Iata and reflect back on previous guarantees issued to Iata on behalf of their clients.
“If members of the travel industry are facing challenges in this respect, they are invited to engage one of our relationship bankers who will happily facilitate the requirements to produce guarantees on their behalf,” she added.
