IATA’s Passenger Agency Conference has approved the return of the joint bank guarantee (JBG) scheme for accredited Indian agencies, effective since January 1. The scheme was discontinued in 2013.
The Travel Agents Association of India (TAAI) and Travel Agents Federation of India (TAFI) had held extensive deliberations with IATA, which lead to the availability of the new scheme to agents from both associations.
With this, India has become the first country in the world to offer JBG as an alternative mode of financial security to IATA.
The JBG scheme is based on the principle of mutual liability of the group involved in offering the financial security.
“The liability limits are defined. To state an example, the liability limit can be in three or four slabs ranging between 2.5 million rupees (US$37,000) to 20 million rupees,” explained Sunil Kumar R, president, TAAI.
“For a slab to be functional, we will require a substantial number of members to participate. Participation is qualified when a member’s financial record and status is found desirable to be admitted. Participation gets confirmed when interested members make a cash deposit of a particular amount determined by the TAAI’s managing committee. It could be about 12 to 15 per cent of the cover.”
He added: “From among all the deposits received, TAAI makes a deposit with a bank and covers the particular group of members under a given slab with IATA. This becomes their financial security to IATA.”
Small and medium agencies believe that the facility offers cost benefits compared to other modes of financial security such as individual bank guarantee and insurance cover.
“If an agent is opting for individual bank guarantee, he has to spend a lot of money due to bank charges and less ticket value capping compared to what one can get through the JBG facility,” said Lokesh Bettaiah, managing director of Triway Travels.
Ashwani Sharma, secretary, northern India chapter, TAFI, said: “This facility is a boon to small and medium travel agents as insurance premiums have increased steeply over the years.”
However, some travel agents opined that the success of the scheme needs to be analysed in today’s context. “A lot of smaller agencies these days are buying tickets from consolidators who offer a better deal,” said Rajji Rai, chairman, Uniglobe Swiftravels.