FEAR OF DEFAULTS PROMPT GLOBAL AIRLINE BODY TO HALF PAYMENT TERMS FOR TRAVEL AGENTS
(Posted 16th July 2016)
News are emerging from across Eastern Africa that the associations of travel agents are alarmed over IATA’s latest tightening of payment rules.
The two sides some time ago had already locked horns when IATA prescribed which insurance companies were permitted by them to issue guarantees and bonds, mainly because some insurers had in the past delayed or defaulted to pay up when agencies failed to meet their monthly obligations.
IATA, departing from their previous monthly payment requirements for ticket sales by accredited agents, has now set the 01st of September as the date when new, twice monthly payments will be required from agents.
This, according to a source close to the regional IATA office in Nairobi, is to improve the cash flow for airlines but also to reduce the risk of large scale defaults.
Travel agents across the region are now scrambling to inform their corporate clientele of the new situation and that their own payment terms will have to come in line with IATA terms and conditions, a major challenge no doubt as companies have for long enjoyed prolonged payment terms with their travel agents, often under threat to move their business elsewhere should they not get soft terms.
Most notorious of course are government departments which regularly delay payments to travel agents for tickets and it is here that the associations and agencies have their work cut out to put them on a short credit leash or on cash terms, regardless of threats to move the business elsewhere but this will require some level of solidarity, not something which has been broadly observed across the industry.