NewGen ISS Integrated Program Elements

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Archibald Cornelius Blair
5 years ago
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deliver relevant solutions for the industry.

2 Integrated Program Elements has a Customer Centric vision aiming to create a faster environment with a safer and easier governance, and accreditation practices that will deliver relevant solutions for the industry. is composed of four key interconnected areas of focus: Agency Accreditation Models Credit Management IATA EasyPay Global Default Insurance 2

3 Accreditation Models Standard Accreditation no Cash Facility Cash CC IATA EasyPay n/a Credit Limit Financial Assessment Chargeback Insurance Standard Accreditation with Cash Facility Cash CC IATA EasyPay Credit Limit Yearly Financial Assessment Financial Security / Default Insurance Multi-Country Accreditation Cash CC IATA EasyPay Credit Limit Quarterly Assessment of Parent Parent Guarantee incorporated into PSAA Financial Security / Default Insurance Agents may voluntarily convert across models as their business evolves, while maintaining their IATA code(s). 3

Accreditation Models Value Proposition - Agents Standard Accreditation with no Cash Facility Entry point into the BSP Minimal financial requirements & related costs may facilitate retention of

4 Accreditation Models Value Proposition - Agents Standard Accreditation with no Cash Facility Entry point into the BSP Minimal financial requirements & related costs may facilitate retention of existing agents Flexibility for agents to later convert to a cash facility Standard Accreditation with Cash Facility Based on current accreditation model but with an improved risk management process Access to credit facility and all methods of payment Multi-Country Accreditation One-stop accreditation for agents operating in multiple BSPs One set of clearly established global requirements and criteria (includes compliance with local rules) One risk management process & aggregated credit limit for the entire group 4

Accreditation Models Value Proposition - Airlines Standard Accreditation with no Cash Facility Increased distribution potential while minimizing risk May address loss of accredited agents in specific

5 Accreditation Models Value Proposition - Airlines Standard Accreditation with no Cash Facility Increased distribution potential while minimizing risk May address loss of accredited agents in specific markets Airline choice whether or not to grant ticketing authority Standard Accreditation with Cash Facility Based on existing accreditation model Introduction of credit limit management to mitigate risk exposure Multi-Country Accreditation Parent entity undertakes legal and financial responsibility for the entire group Visibility of group s sales activity across BSPs Smarter risk management at the parent level and on a more frequent basis (quarterly) 5

6 Standard Accreditation Accreditation in a single BSP Minimum requirements ensure all Agents are legitimate businesses selling travel Agents choose whether to access a Cash Facility Standard Accreditation with no Cash Facility: Access to only IATA EasyPay or the Passenger s Credit Card as forms of payment Compliance with minimum accreditation criteria Limited financial risk Chargeback Insurance or alternative security required to cover risk associated to Credit Card chargebacks or other ADMs 6

7 Standard Accreditation Accreditation in a single BSP Minimum requirements ensure all Agents are legitimate businesses selling travel Agents choose whether to access a Cash Facility Standard Accreditation with Cash Facility: Access to all forms of payment Credit limit applicable Calculation will be defined in Resolution Compliance with minimum accreditation criteria and Local Financial Criteria (LFC) Annual financial review per Local Financial Criteria Ongoing Credit History assessment Financial Security provided based on Agent s Credit Status / LFC Financial Security Calculation defined in LFC 7

8 Multi-Country Accreditation Multi-Country is open to any agent operating in multiple BSPs that can meet the applicable requirements A single accreditation & risk management process for the entire group defined in Resolution Any location of the Multi-Country group sharing more than 50% common ownership will fall under the Multi-Country Accreditation 8

9 Multi-Country Accreditation Key features of the Multi-Country Accreditation Framework: Global accreditation requirements and criteria defined in Resolution Compliance with any local legal requirements Parent entity signs one PSAA for all locations worldwide Legal & financial responsibility incorporated into the PSAA Quarterly assessment of the Parent entity under a Multi-Country Assessment Framework Credit history assessed at group-level Aggregated credit limit established for entire group Financial Security required if Parent fails financial assessment or credit history Financial Security calculation defined in Resolution & aligned with Resolution 800f 9

10 Credit Events vs Administrative Non-Compliances Proposed: Current: Irregularity Agent failure to meet requirements incl. matters related to reporting & remittance rules Credit Event: Incident related to the agent s credit worthiness & ability to pay e.g. Late/short payment Administrative Non-Compliance: Agent failure to comply with accreditation requirement e.g. Failure to report change of location Payment-related defaults will continue to result in the withdrawal of all ticketing. 10

11 Overview of credit management model Financial Security + Remittance Frequency* Accreditation Model Credit Status Credit Conditions Cash Facility Financial Review + Credit History Credit Available to Agent * Only applicable for countries with multiple remittance frequencies. 11

12 Credit Status & Conditions The result of the financial review and credit history will determine the credit status of an agent and applicable risk management conditions. One of three status will be assigned (A, B or C) will be assigned based on the following: Multi-Country Agent Standard Agent Financial Review Multi-Country Assessment Framework Local Financial Criteria Credit History Credit Events number and type 12

13 Credit status & Conditions Fin. Review Assessment Credit History Credit Status Credit Conditions PASS PASS A Cash Facility Financial Security only if required * in LFC for Standard Agents Standard remittance frequency of BSP PASS FAIL FAIL PASS B Cash Facility Financial Security Standard remittance frequency of BSP Cash Facility FAIL FAIL C Financial Security Most frequent remittance frequency in the BSP* * Only applicable for countries with multiple remittance frequencies. 13

14 Credit History Assessment Credit Events will impact the Agent s Credit History based on the number of occurrences: 14

15 Agent s Credit Limit How will it work? Managing the credit limit A monetary limit to the agent s outstanding cash sales (monies at risk) will be established for all Agents with a Cash Facility. $ Agent s accumulated cash sales Continued selling using CC and IATA EasyPay Option to amend financial security amount and increase/ decrease credit limit Open to IATA EasyPay at anytime Open to advanced remittances at any time. Remittance Date Day 1 Day 2 Day 3 Day 4 Day 5 Day 6... Previous Period Sales Current Period Sales 15

16 Credit Limit Calculation Fin. Review Assessment Credit History Credit Status Credit Limit PASS PASS A PASS FAIL B FAIL PASS FAIL FAIL C Equal to financial security amount provided *The Financial Security calculation is a separate calculation defined in Local Financial Criteria 16

remittance date: Agent s Credit Limit re-opens by 60

17 Credit Limit Management Agents can manage their credit limit by paying outstanding monies in advance of remittance date: Agent s Credit Limit re-opens by 60 Agent pays 60 on Day 4 in advance of next remittance date 17

18 Credit Limit Management Agents can increase their credit limit by providing additional financial security: Agent s Credit Limit increases by 30 Agent provides Financial Security for an additional 30 18

19 Credit Limit Management Agents can also choose to provide a lower financial security. In turn, a lower credit limit will be assigned: Agent s Credit Limit decreases by 30 Agent reduces Financial Security by 30 19

20 IATA EasyPay A new industry payment method: Pay-as-you-go solution Alternative to cash and credit card form of payment Voluntary for agents to use Funds secured at time of issuance (no chargebacks) 20

21 IATA EasyPay Benefits for Agents New accreditation models Available for all Airlines Available for all Airlines Voluntary Voluntary Easy 150 BSPs IATA EasyPay Reduced bank guarantees 150 BSPs Voluntary 21

22 IATA EasyPay Benefits for Airlines Fast Available for all Airlines Available for all Airlines Voluntary Voluntary Secure 150 BSPs IATA EasyPay Economical 150 BSPs Globally Available 22

23 IATA EasyPay IATA EasyPay will enable the introduction of Credit Limit Management, but can voluntarily be used at any time Agent s Credit Limit $ Agent s accumulated cash sales IATA Easy- Pay or CC Continued selling using IATA EasyPay or CC IATA EasyPay may voluntarily be used prior to reaching the Credit Limit IATA Easy- Pay or CC Remittance Date Day 1 Day 2 Day 3 Day 4 Day 5 Day 6... Previous Period Sales Current Period Sales 23

24 IATA EasyPay IATA EasyPay will also enable the introduction of new Accreditation Models, and can be used by all Agents Standard Accreditation no Cash Facility Cash CC IATA EasyPay n/a Credit Limit Financial Assessment Chargeback Insurance Standard Accreditation with Cash Facility Cash CC IATA EasyPay Credit Limit Yearly Financial Assessment Financial Security / Default Insurance Multi-Country Accreditation Cash CC IATA EasyPay Credit Limit Quarterly Assessment of Parent Parent Guarantee Financial Security / Default Insurance 24

25 Account Opening Funding EP Number Generation IATA EasyPay Account Opening Type and press Enter button Agent open an EasyPay account online Agent funds the EasyPay account Agent receives EasyPay number from the system 25

26 Ticket Request Authorization Request Authorization Ticket Issuance IATA EasyPay Ticket Issuance Agent requests to issue a ticket through a GDS, selecting form of payment EP and using its EasyPay number GDS requests payment authorization to EasyPay system If sufficient funds in Easypay account, amount is blocked and authorization is generated GDS receives authorization and issues the airline ticket and receipt 26

27 GDS RET reporting Calculation & Reporting Settlement Reconciliation IATA EasyPay Airline Settlement and Reconciliation GDS reports to IATA all tickets issued during the day IATA DPCs calculate amounts to be transferred to each airline and issue HOT files IATA transfers EasyPay amounts to each airline Airline reconciles EasyPay payments with tickets issued 27

IATA EasyPay Technical Validation & Geographic coverage 4 technical proofs

(UK, Austria, UAE, Chile) IATA EasyPay successfully tested with several

Working Group (airline payment experts) reviewed and validated the EasyPay

28 IATA EasyPay Technical Validation & Geographic coverage 4 technical proofs of concept of IATA EasyPay online model executed in different countries (UK, Austria, UAE, Chile) IATA EasyPay successfully tested with several providers, currencies, GDS, Airlines and Travel Agents Payment Methods Working Group (airline payment experts) reviewed and validated the EasyPay model Comprehensive Geographic coverage as a result of consultation with key providers 28

29 Global Default Insurance Solution Objectives Reduce default losses for Airlines while facilitating Agent access to Financial Securities A Global Insurance Solution Better addresses the needs of Agents & Airlines: Strong, flexible & reliable coverage for Carriers Lower costs & increased flexibility for Agents Alternative to Bank Guarantees and other acceptable Financial Securities Agent choice on which to obtain Can easily be adjusted by Agents in a Credit Limit environment Aon & Marsh, two leading global insurance brokers will engage insurers to implement the solution 29

30 Global Default Insurance Key Principles: A standardized global default insurance policy that will be brokered to top credit insurance companies and made available for travel agents to be listed under on a voluntary basis. A Financial Security type additional to those currently acceptable under Resolution 850p: IATA will establish a framework for brokers and insurers to introduce this additional financial security letting the market play One single policy for which any insurance company may bid Insurance will be provided by global credit insurers, not IATA IATA will not participate in the collection of premiums Global Insurance will not replace DIPs 30

31 Global Default Insurance Benefits Increases certainty of outcome in event of a travel agent default or insolvency Improves claims settlements, thus reducing unrecovered defaults Supports sales growth 31

32 Global Default Insurance Benefits Lower cost than other acceptable Financial Security types Allows Agents to obtain a higher cover in a short time frame, and to increase their Credit Limit as applicable Supports growth in ticket sales 32

33 - Your Feedback Local consultation underway to gather agent and airline feedback PAConf approval of framework in October 2015 Adoption by PAConf of new Resolutions targeted for 2016 Go-live expected in

For More Information Email: newgeniss@iata.

34 For More Information Website: Thank you! 34

NewGen ISS ISS was designed under certain market conditions

NewGen ISS ISS was designed under certain market conditions ISS was designed under certain market conditions 1971 Mainly brick & mortar travel agents with local operations Mainly flag carriers with strong positions in their local markets Stringent Rules Strict