The New Generation of IATA Settlement Services (NewGen ISS)
will not affect most U.S. agencies, which typically settle airline ticket
purchases with ARC, but it will affect any agencies with a global footprint
that settle tickets outside the U.S. via the IATA Billing and Settlement Plan
(BSP). And even those agencies say its impact will likely be minimal.
In November, the Passenger Agency Conference (PAConf) -- the
body that supervises policy development and decides settlement rules for IATA,
made up of its member airlines -- adopted resolutions for the full
implementation of the NewGen ISS initiative, clearing the way for its rollout
to begin in March.
IATA said NewGen ISS marks the "most extensive and
ambitious modernization" of BSP since its creation in 1971.
"It's about time to do a refresher," said Juan
Antonio Rodriguez, director of financial and distribution services operations
IATA operates BSPs in 180 countries and territories, last
year processing $219 billion in airline funds.
NewGen ISS has four main pillars, Rodriguez said.
First, IATA has overhauled its accreditation model, now
allowing for three different accreditations versus the previous
one-size-fits-all model, he said. NewGen ISS also introduces EasyPay, a
pay-as-you-go e-wallet solution for agencies.
The initiative also introduces the Remittance Holding
Capacity (RHC), which Rodriguez said is designed to help airlines mitigate
losses and protect against fraud. Agencies have a limit on what they can sell
in any given time period based on the average of their three busiest reporting
periods in 12 months, plus 100%. Finally, NewGen ISS introduces Global Default
Insurance (GDI), an optional financial security option for agents.
In addition, the resolution approved by the PAConf
incorporates provisions related to the Transparency in Payment initiative,
which enables airlines to see the costs and fees associated with specific
payment methods before settlement.
ASTA supports the initiative but pointed out a areas that
could impact the few U.S. agencies NewGen ISS will affect.
"ASTA is fully supportive of the principles around
modernizing the agency program that IATA has set out to do from a global
perspective," said Mark Meader, senior vice president of industry affairs
and education at ASTA. "We certainly support that and are pleased that
[IATA] has chosen to follow that path."
Some new forms of payment will come with complexities,
though, which could pose some disruptions for agencies outside the U.S.,
according to Meader. The RHC could also have an impact on cash flow and
operations in agencies.
ARC, which handles agent-airline settlements for
transactions in which the U.S. is the point of sale, hasn't adopted the measures
in IATA's NewGen ISS.
The reason, said Jeannine Hankinson, ARC's managing director
of policy services, is that 90% of the sales ARC deals with are transacted via
credit cards, meaning that the risk to airlines is far lower than on
transactions settled by IATA, in which cash is more common.
"There's nothing that's been implemented that we would
want to work on full-scale for our agents," Hankinson said of NewGen ISS.
Still, she said ARC convened its Settlement Council
approximately a year ago to look at ways to improve the settlement process.
Some of IATA's new procedures at least hold interest for specific situations,
Hankinson said. She noted that ARC is looking at insurance policies for agents.
It's likely that the number of agencies settling outside the
U.S. "would be a small fraction of the total number of U.S. agencies,"
Meader said, but "the number of tickets those agencies settle outside the
U.S. could be sizeable, as they are likely larger agencies having a global or
Travel Leaders Group
is one agency that will be affected by NewGen ISS because of its global
operations, but Peter Vlitas, senior vice president of airline relations, said
its impact will likely be minimal.