Giving credit where it’s due

The IATA implemented the New Generation of IATA Settlement Systems (NewGen ISS) in Singapore on April 16, the first market in Asia-Pacific to see the roll-out, which will be followed by Australia, Cambodia, India, South Korea and the Philippines later this year.

The NewGen ISS represents the “most extensive and ambitious modernisation” of the IATA Billing and Settlement Plan (BSP) since it was created in 1971 to facilitate the global distribution and settlement of passenger funds between travel agents and airlines, according to IATA.

What’s the deal?
“The thrust of NewGen ISS is aimed at safer selling accompanied by greater choice and flexibility of accreditation models and payment methods,” said Ian Lorigan, director of IATA’s Global Delivery Center in Singapore.

NewGen ISS has four main pillars, he stated. First, IATA now offers a choice of three different accreditation for travel agents, versus the previous one-size-fits-all model.

EasyPay, the new voluntary pay-as-you-go e-wallet solution will offer a secure and cost-effective payment transfer method.

Agents can expect safer selling with the introduction of the Remittance Holding Capacity (RHC), which strengthens the prudential integrity of the BSP trading environment for all participants, said Lorigan.

A new voluntary financial security system, Global Default Insurance (GDI), will be a cost-effective and flexible alternative to bank guarantees and other types of security.

With the exception of RHC, the major precepts of NewGen ISS are opt-in, he pointed out.

Assessing benefits for agents
A check with travel agents across Asia on their reception of the IATA NewGen ISS threw up differing opinions.

Crystal Sim, president & CEO, Albatross World Travel & Tours Singapore, “looks forward” to the RHC and Easypay features in the new model.

She elaborated: “The GDI is also an added alternative feature which gives us choice in arranging our financial security options with IATA. This may release more cash for the business, which are currently used as security for banker’s guarantee (BG) if the cost is affordable.”

Charming Holidays Hong Kong’s general manager David Chau, on the other hand, is concerned about having to fork out extra cash for BG, which could affect SMEs’ cash flow.

“Since the BG amount is based on the volume of tickets, so the more tickets issued, the more BG for agents to bear. Big agencies like us only paid the corporate guarantee in the past, so our cost will be jacked up by the agent’s BG. Additionally, we are not sure if airlines will also request BG from agents in future. If so, it means double BG payments.”

K Thangavelu, managing director of Grandlotus Travel Agencies in Malaysia, meanwhile, sees merits in the greater payment flexibility that the NewGen ISS will bring.

“It also means a more transparent system where the agent’s handling fee will also be revealed to the customer if payment is made from the customer’s credit card,” he noted.

However, greater transparency for customers does not necessarily translate into better benefits for travel agents though, noted Thangavelu.

“If airlines give agents a commission on air tickets sold, then this new system is all right. In the current scenario, where there is no commission and agents need to do a mark-up for their services to the customer, then I don’t see how it benefits the travel agent,” he explained.

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