Business Times

IATA BSP scheme suffocates Sri Lankan Travel Agents

Sri Lanka’s outbound Travel Agents who provide air ticketing and travel related services are currently struggling to survive owing to stringent rules adopted by airlines under the International Air Transport Association (IATA) Billing and Settlement Plan (BSP), travel industry sources.

Around 180 Travel Agents have been forced into liquidity problems with some of them on the verge of collapse due to the rule of the settlement date for ticketing to airlines being within 10 days of issuing the air ticket. It was originally 30 days and later reduced to 15 days, according to Nihal Perera, Past President of the Travel Agents Association and IATA Agents Association.

Under the BSP scheme travel agents cannot obtain tickets directly from airlines unless the agent is IATA accredited. Only 98 IATA accredited agents are operating in the country. All funds generated by the sale of tickets should be deposited in Deutsche Bank, according to an IATA directive. Sri Lanka’s outbound Travel Agents said that Sri Lanka’s banking sector provides services to all sectors in the island and they couldn’t understand why IATA Colombo made such a ruling preventing local travel agents from dealing with Sri Lankan banks in this transaction, Mr Perera, also Chairman of Sparklink Travels said.

Under the BSP scheme, all agents are required to provide a bank guarantee which needs collateral to be given to the banks. Travel Agents said that they generate 95% of the business to the airlines, but some airlines have now resorted to a zero commission. The agents have to survive in business by charging a handling fee from the clients, they added. The IATA Colombo office representative was not available for comment.

They further noted that plans are under way to further reduce the settlement days to seven which will push the travel agents and travelers to more difficult situation. Travel Agents have appealed to the President who is handling the Civil Aviation subject to take necessary action to restore the previous settlement period of 30 or 15 days which will help in preventing the collapse of the Travel Agents business in Sri Lanka, as it would affect the livelihood of around 3,000 persons.

BSP is a system of computerised processing of accounts between agents and airlines on a country-by-country basis. Agents deal with all airlines through one central point - the BSP - rather than having to deal with each individual airline.

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