IATA Accreditation puts a damper on business, say many sub-agents, who find the host of IATA rules and qualifications too sifting. Susan George discovers that many sub-agents are content with the status quo.

The travel industry commonly represents vacations, blue skies, and open highways. The truth, however, is that the field is riddled with rules and regulations, especially if one wants to qualify for membership in official bodies. The industry is replete with official platforms, with IATA, TAAI, IATO, SKAL etc. being some of the more prominent names. When it comes to air travel, unquestionably, IATA rules the roost around the world, and in India. As one of the principal voices of the air transport industry, IATA holds the singularly most important position.

Sub-agents hold a decidedly significant role in the industry, their number being four times that of IATA-accredited agents. This segment is replete with problems, with many sub-agents complaining of being treated shabbily by airlines, being denied perks given to IATA-affiliated agents, and access to competitive rates and discounts that airlines offer.

Contrary to popular belief, not every sub-agent in India wants to become IATA accredited. Smaller sub-agents, reveal sympathy for IATA-accredited agents because of the host of regulations they are liable to fulfil. Many sub-agents are of the view that accreditation translates into loss of freedom of operation. For instance, for purposes of security, IATA specifies details like the kind of lockers to be used by an agent. According to their regulations, ‘Each approved location’s working supply of unissued traffic documents shall when not in use, be locked in a steel safe weighing not less than 182 kg and bolted, cemented or otherwise secured to the floor or wall to preclude movement within or quick removal from the premises.’ Also with regard to employees, the IATA staff qualifications are as follows: ‘The applicant must have his or her employment at least one competent, qualified staff member to be present at the place of business under application during the working hours of such place of business. Such a person must meet the criteria of competence and experience determined by the Agency Programme Joint Council (APJC) in respect of the country where such place of business is located.’

Sub-agents, however, admit that today IATA has relaxed many of their qualification criterion. However, the one stipulation that has remained unyielding - and which poses a barrier to many sub-agents becoming IATA qualified - is that of financial soundness. While several agents still aspire to become IATA - accredited, many are content with their status quo. The reason expressed most frequently by sub agents is the money involved. The view resonant among non-IATA agents is that from membership fees to the dreaded Billing and Settlement Plan (BSP), monetary demands on accredited agents simply add too much pressure.

The tourism industry has been catapulted into some troubled scenarios in the past few years, its growth retarded by possibilities of war, diseases and natural calamity. In a depressed environment, travel agents find themselves in the quintessential ‘Catch 22’ situation - while IATA accreditation's gives a travel agency the stamp of reliability, the concurrent financial liability to airlines is often a high price to pay.

Fortnightly Payments

As an IATA agent, there’s simply no getting around it - every two weeks the agency has to settle bills with airlines, via the Billing Settlement Plan (BSP), the system that allows for smooth transactions between the agency and the airline. Thanks to the BSP, 292 million transactions are processed annually. Yet, the plan has proved to be the downfall of many IATA-accredited agents. Says Pramila Lakshman from a non-accredited Chennai travel agency, "As an IATA agent you have to pay up using the BSP every two weeks, by hook or by crook. We have the advantage of time. Another thing is the security deposit that has to be paid, which is about Rs 20 lakh. To become an IATA agent you have to pay using the BSP. For some airlines like Indian Airlines and Singapore Airlines, IATA agents have to pay additional security deposits as well. So, there are some major disadvantages to being an IATA agent."

Sivaraman from Arunesh Travel Services agrees that the fortnightly payment for tickets puts a lot of pressure on IATA-accredited agents. He also points to the plethora of other regulations that IATA agents are compelled to follow. Says Sivaraman, "One of the disadvantages of being an IATA agent is that everything has to be computerised. Other problems include requirements like the number of trained staff that should be present, the owner’s bank balance, the minimum space that an agency should occupy etc."

CRS Gives Equality of Access

Earlier, the grouse that many agents had was that tickets had to be booked through the IATA-approved agent. Today, however with the CRS system, sub-agents have greater access to booking tickets. Says Lakshmana, "As a sub-agent we enjoy most of the facilities enjoyed by the IATA agents. The only disadvantage is that we can’t issue tickets. But now as the CRS (Computer Reservation System) providers are giving their systems to all agents, even sub-agents have access to booking tickets. The main advantage we have over our IATA contemporaries is with regards to payment. However, some agents complain that select airlines do not entertain bookings made by sub-agents.

Unwavering Financial Soundness

IATA does not entertain excuses. No matter how gruelling the circumstances, the travel agencies cannot afford to dishonour cheques. The element of financial soundness is embedded in the IATA qualifications. With the economic slowdown, it became commonplace that companies, even established names defaulted on payment. As a result, IATA agents often have to dip into their own funds to pay on time. John Angel, proprietor of Vimy Travels, has been in the business for about twenty-five years. He says that he has deliberately chosen to be a non-IATA agent. "The main reason for staying a sub-agent is the commitment level, especially on the financial front. For an IATA agent, for what ever reason, if a cheque bounces, whatever the reason, their name is immediately tarnished in the industry. If it’s a big company, it will be able to get back on its feet, but smaller fries can even get wiped away in such cases or might find it extremely difficult to make a come-back." According to Angel, even if an agency misses the payment deadline by a single day, its name is immediately flashed to all other IATA agents and blacklisted for the future. "Thus sub-agents seem to steer clear of accreditation as the reputation of one’s business can be dismantled overnight destroying ones credit worthiness and the business one may have spent years building up can unravel in a matter of a day or two," says Angel.

Credit Limits Posed by Banks

Many IATA-accredited agents are going in for credit, and big agencies often have banks to fall back on upto certain credit limits. However, especially with bulk bookings by corporate houses, the financial backing provided by banks often falls short of the required payments. The other problem that IATA agents face, is the deluge of paperwork elucidating financial procedures, to continue as an accredited agent. "you have to maintain elaborate accounting procedures, if you are an IATA agent. Your turnover may be about 1 crore, but you will be getting only 0.5 per cent on that. Because an IATA agent has to be show his turnover on paper, he is asked to pay high service tax," says John.

Yet, the IATA stamp is something that many agents look forward to. Dismissing the importance of the accreditation in the travel and tourism world would present an incomplete picture. Citing various advantages like speedier access to tickets. P Vasanth of Four Seasons Travels says that the agency is undoubtedly waiting for accreditation. Says Vasanth, "We are waiting to change status to IATA, as it will be much easier to book tickets with the credentials." Another agent from Jaidurga Travels says that he is only waiting to become financially sound, before he applies for IATA accreditation.

While the importance of IATA’s accreditation is undisputed, there is also little doubt that with the qualification comes a host of responsibilities. while IATA agencies are branded with the mark of trustworthiness, they have no choice but to gear themselves for a financial rainy day. Otherwise, the agency is liable to be putting itself at risk - a risk that some travel agencies are simply unwilling to take.