Travel agents have defaulted on payments to airlines Travel agents have defaulted on payments to airlines

Ten travel agencies defaulted on their BSP (Billing and Settlement Plan) payments – the method by which travel agencies remit money to airlines - in the first ten months of 2010, according to Dr Majdi Sabri, IATA’s regional vice president for Middle East and North Africa.

This compares to 13 cases of defaults overall in 2009. But Dr Sabri points out that the number of defaults is still small when compared to the 4,700 IATA accredited agents in the region.

Agencies that default on payments are allowed a grace period to be reinstated, but during the default period the agency loses the authorization to sell tickets through the IATA BSP.

Travel agencies say they are struggling to cope under growing financial burdens, which only look set to increase as BSP payments move to a weekly remittance cycle – already the case in some countries in the region such as Saudi Arabia and Kuwait.

Dr Sabri said IATA was supporting the introduction of a Default Insurance Policy (DIP) as a financial security method for agencies in case of default.

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“In MENA, we are working closely with the local associations of travel agencies which are driving the introduction of DIP in their local markets.

Today in MENA, the DIP has been implemented in Jordan and Lebanon, with Kuwait and Syria expected to implement DIP in the first quarter of 2011," he said.