First Market for Transforming Agent-Airline Settlements
The International Air Transport Association (IATA) announced that Norway became the first market to implement the New Generation of IATA Settlement Systems (NewGen ISS).
NewGen ISS was adopted by the Passenger Agency Conference (PAConf) in November 2017. It represents the most extensive and ambitious modernization of the IATA Billing and Settlement Plan (BSP) since it was created in 1971 to facilitate the global distribution and settlement of passenger funds between travel agents and airlines. In 2017, the BSP processed $236.3 billion in airline funds with virtually 100% on-time settlement.
“As the first market to implement NewGen ISS, travel agents and airlines in Norway are in the vanguard of a vital transformation to modernize the industry’s settlement functions while ensuring the viability of the travel agent shopping channel used by millions of passengers every day. While Norway is a relatively small travel market, it is technologically advanced and has a history of embracing new solutions, making it the ideal environment to go live with NewGen ISS,” said Aleks Popovich, IATA’s Senior Vice President, Financial and Distribution Services.
NewGen ISS consists of four pillars:
- IATA EasyPay – a new voluntary pay-as-you-go e-wallet solution for issuance of airline tickets in the BSP with a low cost per transaction. As a secure form of payment, IATA EasyPay transactions are not part of a travel agent’s cash sales at risk. This allows travel agents a means to lower their financial security amounts held with IATA, and to issue transactions which are not included in their BSP Remittance Holding Capacity (below)
- Remittance Holding Capacity (RHC), a risk management framework to enable safer selling and mitigate losses resulting from travel agency defaults. For the majority of travel agents, RHC is calculated based on the average of the three highest reporting periods of the previous 12 months plus 100%. Furthermore, measures are available allowing travel agents to manage their RHC, and to continue selling in a secure manner should their RHC ever be reached, such as with IATA EasyPay.
- Three levels of travel agent accreditation, offering agents greater flexibility. Travel agents will be able to choose among the model most applicable to their business, as well as to convert across levels as their business evolves. These models are:
- GoGlobal Accreditation is a “one-stop-shop” accreditation for agents with operations in multiple BSPs. Multi-Country agents will meet a single global set of requirements and criteria and will be able to accredit all their locations worldwide under a single Passenger Sales Agency Agreement.
- GoStandard Accreditation corresponds most closely to the current accreditation, and is for agents operating in a single country. These agents will have access to all the BSP forms of payment: cash, credit card and IATA EasyPay. Initially, all agents in Norway will have GoStandard Accreditation.
- GoLite Accreditation is a simpler form of accreditation for agents that will ticket only using IATA EasyPay and/or customer credit cards. As there is limited financial risk, the security requirements are minimal.
- Global Default Insurance – an optional financial security alternative for travel agents that presents a cost effective and flexible alternative to bank guarantees and other types of security.
Norway will also be the first market to roll out another vital innovation when the Transparency in Payments (TIP) initiative is launched there in April. TIP is an industry initiative focused on providing airlines with increased transparency and control in the collection of their sales through the travel agency channel. At the same time, it will enable travel agents to take advantage of new forms of payment for the remittance of customer funds. No form of remittance is barred by TIP, but travel agents can only use those forms to which an airline has previously given consent. Importantly, if an airline consents, TIP allows travel agents to use their own credit cards – previously not supported in the BSP.
“NewGen ISS go-live in Norway represents the culmination of years of planning, engagement and effort with participants across the air travel value chain, including airlines, travel agents, and IT and system providers. Congratulations to all our partners in Norway who have worked with us to achieve this milestone,” Popovich said.
Over the coming weeks, NewGen ISS will be implemented in Finland (16 March), Sweden and Canada (26 March), Denmark (1 April), Bermuda (9 April), Iceland and Singapore (16 April), with rollout expected to be completed in all BSP markets by Q1 2020.