News
Airline offices’ dollar payments to principals pile up
View(s):Money owed by general sales agents (GSAs) and local airline offices to principals abroad has further piled up with dollars unavailable to settle the dues, sector sources said.
The problem is now months-old and the only reason airlines haven’t cut their frequencies is fear of providing competitive advantage to rivals, they explained. None of them wished to be identified.
Payments for cargo are remitted in dollars. And when tickets are sold, apart from the local commissions, the rest are settled with the airline principals in dollars. But like many other sectors, the airline industry is also in the forex queue.
“We make small payments,” one source said. “For instance, figuratively speaking, if there is a settlement of Rs 100,000 to be done, we remit about Rs 1 a week. Around Rs 250,000 adds to the backlog because it’s a rolling thing.”
Also affected are bank settlement payments (BSPs). This is residual revenue that the local airline offices have after meeting local disbursements such as rentals, salaries, offices at the airport, various taxes and Customs fees, fuel, catering and so on. These need to be regularly sent back in dollars to the head offices. All BSPs through the International Air Transport Association are made via Deutsche Bank.
“This is now acute,” another source said. “We have given the message to everyone to no avail. Government has given instructions to release the funds. Banks are saying no money or they help whenever they can. But our head offices pay fuel bills and ground-handling in dollars. Why can’t they get priority?”
“Our principals are concerned,” he added. “Because of this issue, they do not sell the country as a destination but a service station. We cannot do any big promotions. Routes have to be profitable. And the higher the number of flights, the worse the problem.”
“Dollars are being released for essential items,” he said. “But this is somebody else’s earned money that we have to settle. They are not dividends.”
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