New Financial Criteria for IATA Travel Agents Down Under

A new set of financial criteria has been implemented for IATA accredited travel agents participating in the Billing and Settlement Plan (BSP) for Australia. As in many countries, IATA administers the BSP in Australia on behalf of agents and airlines in that territory. However, IATA does not determine the criteria for the plan.

The criteria were determined by Australia’s Agency Programme Joint Council (APJC) and approved by the Passenger Conference (PACONF) in March. The APJC is comprised of six airlines and six travel agency representatives. The agency reps are AFTA nominated.

The original criteria for the Billing and Settlement Plan were introduced more than 20 years ago. Since then there have been substantial changes within the operating environment, and therefore the APJC felt new criteria were needed.

The purpose of the new criteria is “to ensure good and prudential governance of the IATA Passenger Agency Programme.”

The key points of the new financial criteria are as follows:

Agencies must pass the following tests in order to assess their financial viability: Create and maintain a Client Travel Account test; Minimum share capital and reserve test; Working capital to meet overheads test; and profitability test.

The need for the Client Travel Account is not new; it is, and has been, a condition of the Passenger Sales Agency Agreement (PSAA) between the agents and the airlines.

Additionally, agencies undergoing a significant change in ownership (50% or more) will now be required to provide financial security. Also, there are now security requirements for Sole Trader and Partnerships.

Finally, a Group Company assessment must be done if the agent is a subsidiary of another company or more than one company. In such cases, agents must submit the most recent accounts of the controlling/parent company.

Though the compliance deadline for the new criteria was originally set for Sept. 30, following feedback from the agent community, the new criteria will be progressively phased in over the 2010/11 financial year assessment to allow agents more time to prepare.

The new criteria will come into effect on July 1 and will apply to any incoming IATA accredited travel agents. However, existing IATA accredited travel agents will be assessed progressively under the new criteria through June 2011. This means that agents have more than 12 months to prepare, a spokesperson for IATA said.

Australian travel agents will only be required to provide financial security in the form of a bank guarantee or insurance bond if they fail any one of the tests under the new criteria.

For more information, visit: www.iata.org/worldwide/asia_pacific/australia/Pages/ps_e_afr_iata.aspx.