IATA’s NewGen ISS has been in conversation in the travel industry for about 2 years now. What does this mean for the industry stakeholders?
The travel industry is poised for a big growth and we should be ready to invest. The trends in the industry including NewGen ISS suggest that travel agents need to understand the future and plan for it.
NewGen ISS is a program launched by IATA to deliver faster, safer and more cost effective and relevant financial settlement services and solutions to airlines and travel agents that rely on the IATA Settlement Systems (ISS).
According to IATA’s Implementation wave, Countries in Wave 1 have already implemented the New Generation of IATA Settlement Systems (NewGen ISS) this include Norway, Canada, Finland etc.
The first African country to switch to NewGen ISS will be Egypt in October 2018 followed by several countries in the West and Central Africa region. In East Africa, Ethiopia will go first in April 2019 followed by Kenya, Uganda and Tanzania in the fourth quarter of the year.
There are four key integrated elements of NewGen ISS to be focused on, they include: Agency Accreditation Models, IATA Easypay-a payment wallet to help agents settle part of BSP, Global Default Insurance Programme and Credit Management.
The Global Default Insurance Programme is already active effective 17th April, 2018. IATA easy Pay in Kenya will start implementation on the 1st of July.
“By end 2019 the travel industry in Kenya will have fully migrated to the New Generation of IATA Settlement Systems (NewGen ISS) and we encourage feedback even as we gradually adapt to these new changes” says Mr. Nicanor Sabula, CEO of Kenya Association of Travel Agents (KATA).
Overview of Credit Management Model
This is where the rubber meets the road in terms of how travel agents manage financial securities. How will agents manage their credit in terms of the new framework of NewGen ISS.
Each Agent has an accreditation model. An agent’s accreditation model plus credit status will determine the credit conditions to be given to the agent, in return this will be able to impact and inform the kind of cash (credit) facility that an agent will be given.
The management model is no longer a blanket, IATA will be looking at the agents’ accreditation model where most Kenyan agents belong to the GoStandard accreditation model.
A travel agents performance over the last 12 months determines the kind of financial security and remittance frequency they will have. In Kenya currently, agents remit biweekly but a weekly cycle option is available. Therefore an agent may be forced into a weekly cycle if the credit status doesn’t meet the conditions.
How will IATA do the review? Agents will be required to submit their financial reports as well as the credit history which will be assessed and the agency granted status code ‘A’ if they pass both assessments. Hence, this will allow the agent to get access to credit i.e. cash facility, allow agent to get financial security only if required in LFC for Standard Agents and Standard remittance frequency of BSP.
Secondly, when an agent passes the financial report assessment but fails the credit history review they are granted status ‘B’. Also if an agent’s financial reports are reviewed and they fail but have been a good agent i.e. no defaults, no NOIs, etc. they will still be granted status ‘B’. With status ‘B’, agents will get access to credit cash facility, financial security and Standard remittance frequency (2 weeks) of BSP.
Thirdly, if an agent fails both financial report and credit history review they are granted status ‘C’. With status ‘C’ the agent will still access their financial security, get cash facility but move to the weekly remittance cycle. New agents automatically start from status ‘C’ at least for 2 years. An agency that has done major changes in the ownership of the company in the last 2 years is equivalent to a new agency hence starts at ‘C’. If an agency has been reinstated from previous payment related defaults it automatically fall under status ‘C’.
Other conditions that an agent falls under status code ‘C’ are;
- The usual NOIs that an agency gets in a period of 12 months
- Unreported changes of ownership or legal name,
- Failure to provide financial security before the deadline,
- Failure to provide acceptable financial statements when requested
- Late or short of payment.
If any of the above occurs the agency is immediately downgraded if not already in status code ‘C’.Back to posts articles