An Iatan appointment won't help U.S. agency set up abroad

By Mark Pestronk
Mark PestronkQ: If my agency wants to open a branch in another country, would we have an advantage because we already have an Iatan appointment at our headquarters in the U.S.? What about inside the European Union? Specifically, if we establish a location in one country in the EU, would we then have an advantage if we wanted to open branches in other EU countries?

A:
Having an Iatan appointment in the U.S. does not help you set up abroad, as it means nothing in other countries. If you want to open an office in another country and issue tickets there, you need to start from scratch by obtaining any required local travel agency and then applying for an IATA appointment.

It is ironic that U.S.-based corporate travel agencies (also known as travel management companies or TMCs) serve multinational corporations, which cross borders with ease, but that they cannot themselves expand multinationally without a lot of red tape.

Although Iatan and IATA are separate organizations, it is not so much their separateness that prevents agencies from easily becoming multinational as it is IATA's general rule that each country's appointment stands alone.

The story is completely different within Europe. A travel agency in one of 37 countries and semiautonomous territories can, after one year of operation, obtain the legal right to open branches or subsidiaries in any of the other countries without submitting a new application for each country.

The agency must apply for appointment as a Europe-Accredited Agent (EAA), which is a fairly new status that was designed "to respond to the reality of the European Single Market and to contribute to the removal of barriers to trade and full freedom of establishment," according to the governing IATA resolution. Note that the countries encompass not only the EU but also the additional countries in the European Economic Area plus Switzerland.

Once approved, an EAA can operate throughout the continent "on the basis of a single set of rules and a unified management and reporting system." All that the EAA needs to do is to tell IATA the name and address "and other relevant information" of each new branch or subsidiary.

The EAA program is an excellent idea, and European agencies are fortunate to have it. If a U.S. agency wants to take advantage of the program, all it needs to do is to set up a subsidiary travel agency in one of the 34 countries or three territories and operate for a year.

Remarkably, the criteria for appointment as an EAA are less stringent than IATA's requirements for most countries on the continent. For example, no bond or letter of credit is required if the local agency's parent or home office is well-financed and submits audited financials.

Every EAA location still must be "identified as a travel agency" and must have "competent and qualified personnel," but there is no requirement that each location be open to the public, and it can share premises with another agency.

In corporate travel, the EAA program could help U.S. TMCs whose clients want them to serve their needs in Europe. I know of many such TMCs, but I am sure that most of them do not know how relatively easy it has become to open in Europe, including on site at client offices, once you have a foothold there.

Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at mark@pestronk.com. 
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