The end to bank guarantees is in sight

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DTTAG members have voted in favour of new protection scheme.

The Dubai Travel and Tour Agents Group (DTTAG) has moved one step closer to eradicating the hefty annual bank guarantees imposed by the International Air Transport Association (IATA).

The group has started discussions with UK-based consumer protection specialist International Passenger Protection (IPP), which is offering a more realistic payment protection scheme for Dubai-based agents, many of whom currently struggle to pay IATA each year.

DTTAG’s move is timely given that IATA is currently reviewing its bank guarantee scheme — agents currently pay US $100,000 per year but could soon be slapped with additional fees based on 45-day average sales.

But whether IATA adopts this new system or not, its fees remain a cause for considerable concern for the industry, particularly the smaller agencies who find these payments severely impede their cash flow each year.

IPP director Paul McLean explained the benefits of signing up to his alternative.

“Traditional guarantees that the travel agencies have to get individually through banks usually ask for guarantees against risk, we don’t,” he said.

“This is because the scheme we are proposing would have the majority of agents in the Gulf signing up collectively. This means the group aspect, the collateral of commitment, would give greater long-term security for them.

“We also don’t ask for one up-front cash payment for the service; we base it according to each individual agency’s volume of sales to make it more viable.”

Negotiations between IPP and DTTAG manager Leo Fewtrell are still in the early stage and there are a number of factors still to be determined between IPP and the International Air Transport Association (IATA).

The majority of agencies in the Gulf region would need to agree to sign up for the process to be implemented and for some of the larger agencies, up-front fees to banks and IATA may prove less expensive than costs based on volume of sales.

However, at DTTAG’s general body meeting last month, when Fewtrell asked for a show of hands to indicate who was interested in the scheme, more than 90% of the attendees quickly raised their hands.

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