An open letter to IATA
Seema Luthra, Founder & Managing Partner at Travel Metrics, has written an open letter to Alexandre de Juniac, Director General and CEO, International Air Transport Association ( IATA), in response to his open letter to the travel agent community wherein it was mentioned that the solution for ticket refunds shall be credit vouchers instead of cash refunds. The letter reads as below:
Dear Mr Juniac,
With reference to your open letter, I would like to say that it is in times such as these that the industry needs leadership.The airline industry has a domino effect on the related service industries – hotels, tour operators, ground handlers, travel agents, and other service providers to the industry and the entire economy at large. It’s a vast ecosystem and airlines are not alone in this crisis.
There are a few striking differences of great relevance, which you have neither mentioned nor elaborated
a) Airlines are receiving and will receive financial bailout from their respective country governments. Have they not accounted for your creditors while seeking these bailouts? Please share the details.
b) Airlines may be seeking volume discounts from their vendors like lessors, airports, caterers, GDSs, etc. What are the cost benefits from these discounts? Please disclose.
c) Oil is at an all-time low and while it’s true that one third of the global fleet is grounded but two-third is not. It is also highly unlikely that oil will go back to its original levels. Hence, there is a direct positive impact to cash flow for a considerable time in future. Please quantify this positive impact.
d) Airline operating performance is based on ASK and RASK. Fleet on ground reduces both. As far as cash exiting more than coming in, it’s the same situation with your creditors including your passengers. Some of them may not even survive the losses from this crisis.
Hence, I would say that you are not doing your best.
Let’s look at the specifics:
1. Giving vouchers in lieu of
cash refunds is fine, but what if the issuing airline goes bankrupt or passenger does not wish to fly the same airline? Would these be transferrable to other airlines? Please confirm.
2. The credit shells/vouchers are permitted by the Indian Government, but as an optional tool and not a default practice. Please refer: Civil Aviation Requirements, Section 3 – Air Transport, Series ‘M’, Part II, amended on 27.2.19. Honestly, your member airlines have completely disregarded the guidance of the
Indian Government for years and have been continuously following a self-centred commercial policy, which is anti-travel agent and anti-passenger as well. You can confirm the same with each airline that which of these civil aviation requirements are complied by them.
3. What about the back-end incentives your member airlines committed to pay whole sellers/ consolidators? Will you be paying these through vouchers? If yes, when? Do you have any idea how late each member airline pays these incentives? The airlines have destroyed the travel agency distribution models, cribbed about high distribution costs without providing a viable alternative. Why does paying a commission to a sales agent and a fee to a GDS hurt your member airlines so much? Why can’t your member airlines treat this cost as any other cost of doing business?
Online Travel Agencies have been dealt with suspicion and given unfair step motherly treatment. I have personally experienced
this when I booked a ticket through an Indian OTA and received an email from the airline (IATA member airline) immediately after my flight landed, inviting me to book direct on their own website for my next flight.The airline had my email ID as a mandatory requirement for booking.
This was given in good faith by the OTA, so I could be notified about any flight delays and cancellations. Not for direct marketing by your members. Is this an ethical and fair business practice? Which industry can thrive if the principals compete with their distributors? It is cannibalisation at its best. You are speaking about default rates among travel agents. What if the airlines default? It has happened before, and no one compensates the hapless travel agent. Certainly not IATA.
Sir, the rest of the world also needs to pay salaries and take care of fixed costs not just your member airlines. I request you to ask your member airlines to introspect and contemplate their motives and not come down heavily with high-handed unilateral measures. They have not been with us through the good times and have used every crisis to further their own agenda.
Please come up with a plan for recovery and true collaboration, which is sustainable and ensures that all stakeholders have a fair chance of survival.
(The views expressed are the author’s own. The publication may or may not subscribe to the same.)
The rest of the world also needs to pay salaries and take care of fixed costs not just your member airlines