ASATA column: Just Plain Unfair

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Think about it. Would you extend unsecured finance to your customers for over 90 days, as part of your upfront deal, before you had even negotiated your rates? Didn’t think so. That’s why I find it shocking when I hear that the biggest challenge travel agents face today is being asked by their customers to do just that.

Whilst in most other types of retail outlets ‘cash is king’, this is not the case in terms of the travel industry. The International Air Transport Association (IATA) requires travel intermediaries to provide financial security in the form of a bank guarantee, which is calculated according to a set of financial criteria. This calculation is based on the cash sales transacted within their business and certain minimum requirements are set. An understanding of bank rules and regulations quickly show that this money is inaccessible and reflects as a liability on one’s financial statements. In the event that the travel intermediary defaults on any airline payment, IATA will offset the guarantee to recover any amounts owed to their member airlines.

Cash is often the chosen method of procuring travel, but it does place an immense financial burden on the travel company, particularly when there is a probability that they should do it for free, taking into consideration that the customer has an expectation that the travel professional will be available on a 24-hour basis. 

It is also assumed that sufficient investment is made in training, in order to provide customers with intellectual expertise and most importantly, the company is expected to continually invest in the latest technology to afford them seamless booking processes and streamlined reconciliation, which lends itself to efficient travel expense management compliant with company budgets.

If you compare the average cost of the travel intermediary’s professional fee against the total cost of the transaction and the amount of hours spent on the reservation, it is inconceivable that a customer should expect that the travel company should provide 60 days interest-free funding on any portion of their travel budget. That’s just plain unfair. 

Robyn Christie

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