Last week, the Kenya Association of Travel Agents (KATA) and the International Air Transport Association (IATA) held a virtual forum to sensitize Kenya’s travel agents on IATA’s New Generation Settlement Systems (NewGen ISS) scheduled to be implemented in the Kenyan Market in September 2021. This new implementation date comes after IATA had postponed its initial implementation date of October 16th 2019.
According to IATA, the NewGen ISS represents the most extensive and ambitious modernization of the IATA Billing and Settlement Plan (BSP) that travel agents have been using to facilitate the global distribution and settlement of funds between travel agents and airlines for the past five decades.
The webinar which was opened by Madam Shazmin Manji, Vice-Chairperson Kenya Association of Travel Agents was geared towards preparing and educating the Kenyan travel trade players on the NewGen ISS accreditation models, IATA’s approach towards an enhanced risk management framework for the industry with the introduction of the Remittance Holding Capacity (RHC), and a new form of payment dubbed the IATA EasyPay based on the pay-as-you-go model.
The NewGen ISS comes with three levels of travel agent accreditation, allowing travel agents to choose the model most applicable to their business while giving them an opportunity to switch between models as their business evolves.
“NewGen ISS’ Risk Management Framework will offer a more secure environment for all participants through; fitting risk management to agents’ choice of accreditation and participation terms, introduction of a Remittance Holding Capacity (RHC), to enable safer selling and mitigate losses resulting from travel agency defaults,” said Manal Al-Taher, IATA’s Regional Manager for Transformation and Products-AME.
The system packs an alternative payments solution for travel agents, the IATA EasyPay, which will be a voluntary pay-as-you-go e-wallet solution for issuance of airline tickets in the BSP. The IATA EasyPay solution will allow travel agents to lower their financial security amounts held with IATA, and to issue transactions which are not included in their BSP remittance capacity.
The NewGen ISS will also feature the Global Default Insurance that will offer optional financial security alternative for travel agents serving as an alternative to bank guarantees.
“This initiative will bring positive changes to the current Billing Settlement Plan (BSP) that continues to serve the industry’s financial settlement requirements. It will bring greater options and flexibility to travel agents and provide greater financial security to airlines,” said Al-Taher.
RHC Calculation Model
The Remittance Holding Capacity (RHC) introduces a monetary threshold for agent’s BSP Cash sales. Agents will be notified by email when they reach 50%, 75% and 100% of the determined RHC, and will be able to monitor their RHC usage directly through the IATA Customer Portal.
The RHC for travel agents will be calculated based on the average of the three highest reporting periods of the previous 12 months plus 100%. However, in the current Covid-19 situation, IATA clarified that the calculations will be based on the 2019 sales, owing to the fact that 2020/21 sales were severally impacted by the ongoing Covid-19 pandemic.
While commenting on the calculation model for the Remittance Holding Capacity based on the 2019 sales, KATA CEO Agnes Mucuha said, “2019 sales levels will favour our travel agents, giving them a higher RHC thus allowing them to sell more.”
While addressing any fears that travel agents expressed over IATA limiting their selling capacity, Dania Al-Abbadi, IATA’s Senior Manager in charge of Agency Risk Management said that RHC will not restrict or limit travel agent sales. She reiterated that the measure is purely a prudential safeguard to protect airline revenues and not restricting sales.
“Travel agents will still have the capacity to continue selling via IATA EasyPay or by increasing their financial security which will in turn increase their RHC threshold,” said Al-Abbadi.
Dr Joseph Kithitu, KATA Finance Director urged members to familiarise themselves with the new rules as soon as possible, to understand the potential impact on their business. He advised members to lay more emphasis on understanding how these two areas will impact them; the Risk Status and Remittance Holding Capacity (RHC).
He encouraged members not to fear the new system, and to embrace the new technology tools that the industry is inventing as they are intended to create more efficiency.