Last month saw one of the most significant evolutions in the travel technology landscape in many years, with the adoption by the International Air Transport Association (IATA) of new resolutions which govern the development of the New Generation of IATA Settlement Systems – also known as ‘NewGen ISS’. The IATA Billing and Settlement Plan (BSP) has formed the financial backbone of the air transport industry for the last 45 years, and has successfully facilitated the distribution and settlement of funds between travel agents and airlines – an amount worth over US$230 billion last year. However it now looks set for a makeover.
Technology providers will already be working on changes to their systems to support NewGen ISS, which includes the introduction of IATA EasyPay – a voluntary, pay-as-you-go e-wallet payment solution for issuance of airline tickets. NewGenISS includes a range of new travel agent accreditation models, rather than the “one size fits all” system introduced in 1971, as well as Global Default Insurance – an optional financial security alternative to bank guarantees for travel agents.
There’s also a controversial new “risk management framework” to mitigate losses from travel agent default in the BSP. Potentially this could see the implementation of credit limits for agencies – a move which was staunchly opposed at the recent IATA Passenger Agency Conference by AFTA CEO Jayson Westbury, in his role as outgoing chairman of the World Travel Agents Associations Alliance.
Westbury pulled no punches, blasting some of the changes as “window dressing that are not really going to provide the industry with an appropriate program that is fit for purpose”. Key issues include the ability for the system to support “modern payment choices” – notably the use of virtual credit cards which are in many cases stymied by an IATA resolution which prohibits agents from paying for tickets using store credit cards. Westbury urged IATA to rethink elements of the program, pointing out that many of the issues of potential travel agent default and credit limits would be much better solved by the more timely availability of sales data, which is often delayed by as much as 48 hours. “The key is real time sales reporting into IATA, and in true partnership we all need to work together with the GDS to make this a reality,” he told the conference.
He described the IATA plans for credit limits – also known as the Remittance Holding Capacity (RHC) – as potentially using a “sledge hammer to kill a butterfly”. He said while this might possibly help airlines shut down an agent in the process of absconding with their funds, it will definitely significantly penalise an honest agent who is “simply having a good week and is selling well”.
Following Westbury’s speech IATA issued a statement backing away from the RHC, saying a joint travel agent and airline group had been established to define a proposal by early next year, for possible adoption at next year’s IATA passenger conference. “We are taking a workingtogether approach to this important pillar of NewGen ISS in order to respond to travel agent requirements for flexibility, while creating a structure that enables safer selling and greater protection of ticket funds,” said IATA senior vice president for financial and distribution services, Aleks Popovich.
On other fronts IATA is also continuing to progress the development of its New Distribution Capability (NDC) and at the IATA World Passsenger Symposium in Dubai last month unveiled a business case developed in partnership with SITA which proposes the global deployment of Radio Frequency Identification (RFID) technology to accurately track passengers’ baggage in real time. The RFID system is estimated to be able to reduce the number of mishandled bags globally by up to 25% over the next seven years, saving airlines more than US$3 billion.
