Kenya Airways says it has made a ‘special consideration’ to allow SWG to stagger the payment of its outstanding ADM debt, following the announcement last week that the agency was forced to close its ticketing platform due to the impact of R5,5m in ADMs.
But SWG says the three-month payment option offered by the airline is still out of its reach, coming at a time when neither SWG nor its ITCs are trading. As a result, SWG has been suspended from the BSP after the agency failed to settle its last billing.
Furthermore, Dinesh Naidoo, group operations director of SWG, says issuing ADMs of this magnitude in this manner is flagrant abuse of the BSP, whose primary purpose is the settlement of ticket revenue and not debit memos. He insists that he does intend to dispute the ADMs and has already engaged the Travel Agency Commissioner on the matter, but Iata’s rules require him to pay for the ADMs before he is allowed to dispute them. Dinesh feels that this practice in unethical and highly biased in favour of Iata’s airline partners.
Kenya Airways says there have been several ongoing discussions and engagements with all the industry parties involved. “The outstanding debt came as a result of Kenya Airways not being paid the correct fare for the services it rendered to customers on the Johannesburg-Nairobi route due to malpractice of coupon trashing using SWG’s Iata booking code. Bookings were generated using the Johannesburg-Kigali fares instead of Johannesburg-Nairobi fares. SWG representatives have admitted to the ADMs being valid and have so far paid for R625 460 of the ADMs. They indicated that the revenue loss to the airline was occasioned by bookings made by their sub-agents and that they would take various corrective and recovery actions on the sub-agents,” said a spokesperson from Kenya Airways’ head office.
The airline claims that the ADMs in question were issued as per relevant Iata ADM management process and guiding resolutions, with the penalty communicated and applied being reasonable to cover the airline for revenue lost on the unutilised sectors to Kigali.
But Dinesh says that many of the 550 ADMs under discussion relate to live 2020 bookings where passengers have not been able to travel on the tickets at all due to the COVID-19 travel bans. He says that in these instances the passengers could not possibly have trashed the coupons or skip-lagged as they never departed from South Africa on the first ticket segment.
Kenya Airways continues: “To date the passengers have not requested to be issued with refund vouchers that Kenya Airways has released to customers affected by COVID-19-related flight cancellations, which shows the intent to cause revenue loss to the airline.”
Travel Agency Commission for Europe, Middle East and Africa, Andreas Körösi, told Travel News that a recent change in Iata resolutions demanded that disputed amounts must be deposited for up to a maximum of two months whilst the dispute is settled.
“I have no insight if these specific ADMs are justifiable or not. I can only confirm that SWG is one amongst many agents who in the past few months have asked for a TAC review due to huge amounts in ADMs which they are mandated to deposit or get defaulted. This issue is called Post Billing Dispute,” explained Andreas.
He added that since ADM disputes were considered “commercial disputes” they had to be resolved bilaterally and outside the BSP. “When ADMs are unreasonably high this office has on several occasions asked Iata, due to COVID-19 consequences, to temporarily waive the requirement to deposit amounts representing the disputed ADM. So far I have not received a response from Iata,” he said.
Industry weighs in
Ceo of Asata, Otto de Vries, said he was saddened by Dinesh’s resignation as president of Asata due to this matter.
“He has been a great president and is a stalwart of our industry. It is terribly disappointing to see a matter like this trip up a business during the very time when industry partners should be supporting each other rather than turning on each other,” said Otto.
He added that the process of ‘Pay before Dispute’ was a policy created by airlines as a way to protect the collection of funds that they believed were owed to them. Otto said that while he did not agree with this policy it appeared that, as long as agents continued to contract through BSP on a principal and agent model, airlines would continue to set the rules in their own favour. He added that the agent-principal model was outdated and based on a time when airlines paid travel agents a commission to act as agents on their behalf.
Otto also confirmed that Asata’s vice president, Shereen Morolo, was currently acting in the role of president for the association.
There have been outpourings of sadness from the industry over the news of SWG’s closure of its ticketing platform. Just Sayings’ Robyn Christie told Travel News that the industry’s hearts were bleeding for Dinesh. She said that no travel business could sustain, and immediately settle, an unexpected loss of R5m at this time and said that Dinesh has acted incredibly nobly by stepping down from Asata ahead of this storm.
The airline says the staggered payment option remains available to the agent even as the parties continue to engage Iata to resolve the matter “through the existing industry process governing ADM management”.
