IATA is piloting a debit card-based system that allows agencies to continue issuing tickets even after they have maximised the bank guarantee. It is also exploring a global default insurance scheme, which will lower the cost of insurance for agencies.
The debit card-based system, Easy Pay, is being piloted in South Korea by IATA, Korean Air, Asiana Airlines, selected agencies including Modetour Network, and Woori Bank, which is the clearing bank for the service.
Said IATA’s regional vice president Asia-Pacific, Conrad Clifford: “An issue that agencies face is they cannot issue more tickets once they have maximised the bank guarantee. But sometimes they need to issue more tickets on a short notice, typically during peak periods.
“With Easy Pay, as long as they have credit in their debit card with the bank, they can issue tickets against that. So airlines are not exposed to any kind of credit risk while agencies can continue to issue tickets.”
The system was piloted in South Korea because a lot of travel consultants there are “very much card-based” while the card issuer is issuing the card at no cost. Other advanced card-based markets, such as Singapore, could be next if the pilot works, said Clifford.
IATA is also making RFPs to the big insurance providers for a global default insurance programme. Currently, the programme goes market by market. “What we’re trying to do is have a global instead of local programme, which should make it a lot cheaper for agencies,” he said.
The default ratio is low, said Clifford, “but obviously we’d like it to be zero, or if there is a default, we need to be insured against it”.
The travel agency sector still accounts for more than 50 per cent of airline ticket sales, the percentage believed to be higher in Asia-Pacific where there are many customers who still want a service provided by agencies. This is why IATA continues to innovate and experiment ways to support the trade, Clifford added.
– Better partners now – read the View from the Top, TTG Asia, June 19, 2015