IATA has announced proposed Local Financial Criteria (LFC) applicable to BSP South Africa; criteria that was proposed by the Agency Programme Joint Council (APJC) for BSP Southern Africa (Incorporating South Africa, Lesotho, Swaziland, Namibia and Botswana) and endorsed by the 38th sitting of the Passenger Agency Conference (PAConf/38).
Why did it need to change?
The changes to the LFC were a culmination to a lengthy consultative process between Airlines and Agents on the APJC to meet the constantly changing business environment. In addition to being one of the oldest BSP operations in the world, the current LFC had not being updated in over 15 years. APJCs must meet at minimum once a year and review the Local Financial Criteria.
What is the APJC?
The APJC comprises five airline and five agency representatives. Agents are selected from the agent community and this is coordinated by ASATA, which participates only as an observer at the APJC. IATA acts as the secretariat. The role of the APJC is to develop the Local Financial Criteria (LFC) and it may also consider all aspects of the Agency Program in the country or area and make recommendations in the form of agenda proposal to the Passenger Agency Conference.
What is the deadline?
According to IATA, the effective date of the new Local Financial Criteria will be 1 February 2016, and as a result all Accredited BSP Agents will be required to ensure compliance before the said date.
What is the next step?
In December 2015, IATA will undertake an extraordinary financial assessment applying the new local financial criteria against the current audited financial statements as held by IATA. The assessment will be based on the twelve (12) months sales period between 1st December 2014 and 30th November 2015.
The result of this assessment will be communicated directly with each accredited BSP agent with a compliance date of 01st February 2016 as a deadline to provide the requested Financial Security.
Where can I find more information?
The new Local Financial Criteria applicable for BSP ZA can be viewed here.
IATA has also produced a list of FAQs for agencies that includes information on the key LFC changes, how they will affect your business and key changes that are expected in future.
Please forward any questions you may have around the LFC to firstname.lastname@example.org.
It’s no secret that for many airlines’ profits come from their ancillary product sales.
According to the research paper conducted by IATA and WTAAA, NDC: Travel Agencies’ Enabler to Success, on average 76% of travel agencies book airline ancillary products.
TMCs are the most likely to book airline ancillaries for their travellers, with nearly nine in 10 doing so. TMCs’ primary audience, corporate travellers, may have travel policies that allow them to buy these products.
Airlines’ websites offer the most complete selection of ancillary products – no doubt the reason why agencies use them most to book ancillaries.
To do this, though, may require an agent to toggle between a GDS, where the agent books the flight, and an airline website, to book the ancillaries. The process is inefficient, reducing agent productivity, driving up agency costs, and frustrating travel agency executives – and, by extension, the travellers the agency serves.
Agency executives don’t like this fragmentation. Agencies view having to use multiple channels to book air and ancillary products as counterproductive, and aren’t pleased with the additional effort required to integrate non-GDS transactions into their mid- and back-office systems.
This is why the researchers believe in the critical nature of NDC to the global airline industry. With NDC, airlines can, at last, help evolve the traveller’s purchase decision in indirect channels from being based strictly on price, rendering airlines as substitutable commodities, to overall value based on factors such as airports, schedule, amenities, journey cost – not to mention the value of the brand. Price will always be a decision-making criteria, but it need no longer be the lead or sole criteria.
What to learn more about NDC? Visit IATA’s NDC page for details.
The International Air Transport Association (IATA) announced that it was pausing the rollout of its Cabin OK initiative and beginning a comprehensive reassessment in light of concerns expressed, primarily in North America. This will include further engagement with program participants, the IATA membership, and key stakeholders.
The Cabin OK initiative was launched on 9 June 2015 with the aim of providing passengers with greater assurance that their carry-on bags will travel with them in the aircraft cabin, even when the flight is full. The initiative provides consumers with a voluntary option to use a Cabin OK labeled bag (with optimally sized dimensions of 55 x 35 x 20 cm or 21.5” x 13.5” x 7.5″ inches) that would (1) be immediately recognizable as complying with the vast majority of airline maximum size requirements for cabin baggage and (2) be given a priority (determined by airlines individually) to remain in the cabin on full flights when cabin storage capacity is exceeded.
Interest in the Cabin OK program has been intense. While the value of this initiative has been welcomed by many, including a growing list of airlines expressing interest in the program, there has also been much confusion. In North America particularly, there have been significant concerns raised in the media and by key stakeholders.
“Our focus is on providing travelers with an option that would lead to a simplified and better experience. While many welcomed the Cabin OK initiative, significant concerns were expressed in North America. Cabin OK is a voluntary program for airlines and for consumers. This is clearly an issue that is close to the heart of travelers. We need to get it right. Today we are pausing the rollout and launching a comprehensive reassessment of the Cabin OK program with plans to further engage program participants, the rest of our members, and other key stakeholders,” said Tom Windmuller, Senior Vice President, Airport, Passenger, Cargo and Security.
IATA reiterated some key principles of the Cabin OK initiative which will continue to guide the reassessment: Cabin OK is a guideline for an optimally sized cabin bag, not an industry standard. Cabin OK does not seek to define a maximum size for carry-on bags, which is something each airline does individually. And no consumer will be forced into buying a new bag as a result of this voluntary initiative.
IATA requires that financial security instruments (Bank Guarantees) issued in favour of the BSP are in accordance to the approved “new” global template that can be found on the IATA Resource Centre (click here): Country – South Africa and Topic – BSP Agents: [New IATA Bank Guarantee Template for South Africa]
IATA Accredited locations must ensure compliance with the instructions communicated to avoid any inconveniences.
As a result of the adhoc cases and challenges faced by IATA Accredited Travel Agents from certain local financial institutions (banks) and/or their branches in their inability to comply with the “New” IATA Template; IATA and ASATA will be working together through a joint working group to meet with Commercial Banks to identify a solution to ensure compliance with the New Global Template.
IATA Accredited Locations that face this challenge are requested to immediately notify IATA Customer Services of the problem; on exceptional basis and where confirmation of the same is provided, the Accredited Location can proceed with the issuance of the Bank Guarantee using the old/existing template that was used for financial security document in custody of the BSP.
The following should be complied with at all times:
1. Beneficiary address on the Bank Guarantee should be addressed to the IATA Office in South Africa
International Air Transport Association
88 Stella Street
Sandown Mews East,
2. Claim Period – Clause Number 5 – should strictly read:
“5. This Guarantee is valid from —– (insert date) and shall expire on —— (insert date) (hereinafter called the “Expiry Date”) and is conditional upon claim(s) being made and received by us not later than Two (2) months from the Expiry Date. Thereafter, our joint and several liability hereunder shall automatically cease and this Guarantee shall become null and void.”
IATA reserves the right for the final acceptance of the financial security document submitted.