AS THE deadline for the
removal of monthly
remittance looms,
agents are still questioning
whether the risk airlines
face justifies the change
in payment structure
– particularly as it has
major impact on agencies’
corporate and government
accounts.
This was revealed in a
panel discussion on the
controversial topic at the
Asata Travel Summit.
“Iata believes that
markets with a 30-day
remittance cycle pose
a higher risk to noncollection,” said Alexandru
Stancu, Iata’s head of
regional office for Africa
and Middle East. “Iata
endeavours to keep its
collection rate at its current
of 99,98%.”
He added that South Africa
is one of only six remaining
markets in the world
still working on a 30-day
remittance cycle. “The world
is working towards weekly,
and in some markets daily
remittance cycles.” He
stressed that the BSP is
not a mechanism to provide
credit to the market.
Airlines claim that this
is being implemented to
mitigate and manage risk,
however Asata believes
it is to receive payment
quicker, Otto De Vries, ceo
of Asata, said. He added
that risk is already managed
in the programme through
strict criteria set by Iata,
including bank guarantees
and default insurance
programmes.
Many agents are SMMEs
who do not have the cash
flow to support the reduced
remittance cycles and carry
the credit that their clients
will still expect to receive.
The industry can expect job
losses, Otto added.
“I can’t understand the
risk facing airlines under a
30-day remittance cycle,”
said Phale Naake, dept. of
labour deputy director: fleet
and travel management
service. “Surely, any risk
is already being managed
by Iata’s stringent risk
management criteria?”
Phale questioned Iata’s
“drastic decision” and
added that he didn’t
believe that Iata had
acquainted itself with
South Africa’s ‘unique’
market. “This disruption
to the government travel
sector would mean that
government would be unable
to pay on time,” he said.
The change is daunting
to those working in the
government sector, said
Sailesh Parbhu, md of XL
Nexus Travel. He expressed
concern that relationships
with car rental and hotel
partners would suffer as
a result of having to pay
airlines first.
“We’ve identified that
government travel is
one of the more highrisk sectors; we know
government departments
are bad payers,” said Otto.
“Government spends an
estimated R1,5bn a year on
tickets. SAA is the largest
carrier of government
employees and is most
exposed to risk of nonpayments.”
New chief commercial
officer of SAA, Phillip
Saunders, said that while
he has every intention of
engaging with the trade to
prepare it for the change,
agents must be cognisant
of the fact that South Africa
doesn’t exist in a vacuum
and the removal of monthly
remittance is a positive
thing for the management of
agency cashflow.
The other side
eTravel has been on weekly
remittance for a year
now, Tammy Hunt, md of
eTravel, told TNW after the
debate. “In our opinion,
the industry should try to
move away from extending
credit as we are not in the
finance industry. However,
we do understand it would
be difficult to change
overnight.”
“Serendipity Group is also
on a weekly remittance
schedule; this was a
conscious decision we
made because we knew
this change was coming,”
says Dinesh Naidoo, group
operations director of
Serendipity Worldwide Group
and Asata president.
He encourages agencies
to move to a weekly
remittance schedule,
advising agents to
renegotiate with clients,
making them pay by
credit card.
Agents question airline risk
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