Brian Barrow – UFTAA – Head Air Transport

Adopted in June 2007 by the IATA Passenger Agency Conference, for expedited application in South Africa, closely followed by Mail Vote adoption for early introduction in Botswana, Swaziland, Lesotho, Namibia and Zimbabwe, Resolution 818g, has since emerged as the body of IATA Passenger Sales Agency Rules of choice.
The December 2007 meeting of the Conference extended the resolution to Australia, New Zealand and the South West Pacific area, with expedited implementation. The October 2008 Conference added Jordan, Latin America (except Colombia) and the Caribbean (i.e. about 40 countries), with mid –2009 as the implementation target date.
By means of Mail Votes launched between Conference meetings, the 14 states making up the Central/West Africa region were added, as were Ethiopia, Mozambique, Nepal, Nigeria, the Russian Federation, Syria and Zambia. The Conference is thus encouraging Members to promote the introduction of Resolution 818g, wherever possible.
When introducing this resolution to the Conference in 2007, IATA counsel stressed that it was designed to be ‘competition law compliant’ in any increasingly sensitive legal climate. The three main differences between the new Resolution and the other on the IATA books, except Resolution 818 applicable in the EU/EEA, were:

a) the removal of collective ‘cash basis’ status for Accredited Agents,
b) the removal of collective provisions governing the reporting and remittance of sales to airlines, made outside the framework of the BSP,
c) the transfer of certain decision making powers previously vested in Agency Programme joint Councils to the Conference for approval action of APJC recommendations, under IATA Legal Department oversight.

The Conference has in the meantime moved to amend other sets of Passenger Sales Agency Rules, with an eye to compliance with competition law in the countries concerned. Because it has the advantage of being more recent than the other Resolutions, Resolution 818g incorporates language simplifications and seeks to bring the change of ownership provisions closer to contemporary business practices.
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The IATA Agency Programme covers most of the world, except for the USA, where a stand alone system of accreditation and sales reporting and settlement is run by the Airlines Reporting Corporation, headquartered just outside Washington, D.C It thus would seem likely that most of the world faces the prospect of receiving Resolution 818g, sooner or later. Because of the close interest paid by the European Commission in the drawing up of Resolution 818, in 2005, to meet specific European competition law needs, that Resolution is perceived as being in conformity with the Treaty of Rome competition provisions. Understandably, Resolution 818 influenced to a large degree the shape of the subsequently developed Resolution 818g.

In the industry, it is the received wisdom that the crown jewel of the IATA Agency Programme to its owners, the airline Members of IATA, are the group boycott provisions. Under them, an Accredited Agent who falls foul of the reporting and remitting disciplines can be collectively and summarily excluded from the BSP by being declared in default by IATA. As most airline ticket sales by Agents transit the various BSPs, the consequences of exclusion from that system are serious indeed for the Agent. As a result, the bad debt record of the BSPs is the envy of every other form of retail distribution system, floating somewhere between a quarter and less than half of one per cent.

The downside, however, is that this particular crown jewel can also become the source of potentially serious liability. In the event the group boycott were to be misused or abused, the consequences for those responsible could become the stuff of antitrust suits brought by Agents who have suffered serious economic loss and/ or of reputation as a consequence of less than absolutely scrupulous and objective application of the IATA rules. IATA is sensitive to this and has issued strict instructions to its staff about complying with the strict letter of its Resolutions.

If, in fact, a significant potential source of antitrust litigation continues to subsist in Resolution 818g, why do the Passenger Agency Conference and IATA seek to replace other sets of Passenger Sales Agency Rules by that Resolution? Well, the same risk similarly applies to all other sets of IATA Passenger Sales Agency Rules. So, that position does not change. However, it is not unlikely that the imperatives of efficiency also have a lot to do with the migration toResolution 818g. Until recently, there were ten sets of Passenger Sales Agency Rules in operation and although the differences between them are small, they nevertheless complicate the management of a global distribution system. Simplification and standardization drive down costs and IATA, increasingly a business, with business enterprise values high on its list of priorities, is keen to cut costs, not only for itself but also for its Airline customers all of which are users of the BSPs, an activity which last year managed a sales volume probably little shy of USD 240 billion.
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Adjusting the powers of the AP JC merits particular attention. In practice, the recommendations of most AP JCs receive favourable consideration by the Conference and are usually endorsed. Because the Mail Vote device is being more frequently used by IATA, the AP JCs’ recommendations often effectively bypass Conference debate before being put the vote. The mechanics of the Mail Vote system that offers Members just three options, ‘in favour’, ‘against’ or ‘abstain’, result in very few Mail Votes failing to be adopted. Thus although officially relieved of direct decision making powers under Resolution 818g. AP JCs nevertheless remain key in shaping local financial qualifying criteria for IATA accreditation. Their role in shaping staff and premises qualifications criteria is, however, diminished and, in Europe, is eliminated altogether.

IATA no longer prints and distributes to IATA Accredited Agents the Travel Agent’s Handbook containing the key Resolutions that govern Agents’ relations with airline and IATA. IN consequence, it falls to each Agent to consult the IATA Website, to locate the relevant publication to learn what the rules say. A prudent Agent downloads the current edition of the publication applicable to his or her country and keeps it on hand, for ready reference, In practice, few Agents do this and so, put themselves at an avoidable and serious disadvantage.

With the prospect of uniform Passenger Sales Agency Rules, for most of the world, perhaps it will become a practical proposition to publish a summary account of the Agency Programme, in plain language, for travel agent’s convenience. UFTAA is examining this possibility, as a way of helping its members better understand what IATA and its Members, the airlines, really expect of them. Business is complicated enough without having to work through hundreds of electronic pages of technical and sometimes obscure text, which can hardly claim to be travel agent reader friendly.
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Revision to Sri Lanka’s Local Financial Criteria

A road map to prepare for tomorrow's passenger
Five goals towards sustainable profits and better service.  
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