Like many large organizations, most of IATA's business travel is arranged through a travel agent. Personally, for simple trips I book directly with the airline. But when planning a complex vacation for the family, I also rely on the help of a professional agent.
But have you ever wondered how the system works, particularly for air travel? How is it that the conversation I have with my local agent (or on a travel website) results in a ticket, paid in my local currency, which is good for travel on an airline halfway around the globe? And how does my payment to the travel agent get to the airline?
The answer is the IATA Billing and Settlement Plan (BSP). Since 1971 the BSP has managed the flow of funds—and the reporting of those funds—between travelers, their agents and airlines in a seamless fashion. The BSP is truly a global system with operations in 180 countries and territories (we don't operate a BSP in the US—that's done by ARC). Last year the BSP processed $219 billion of tickets.
The BSP has certainly stood the test of time, but it was designed in a different era. In those days, travel agents and airlines operated with stringent fare rules and governance, and relied on limited payment methods. Cash was still king, tickets were printed on paper, and there was no such thing as an online travel website.
So we're updating the BSP to ensure it will better meet the needs of both airlines and travel agents, based on four major changes in a system upgrade that we call NewGen ISS—short for New Generation of IATA Settlement Systems:
- Different types of travel agent accreditation to work in the system. This isn't 1971. Not all travel agents are the same. Some are mom-and-pop shops that support their local community's travel needs, others are global businesses supporting corporations. By offering three levels of accreditation, agents will be able to choose the model that best fits their business model and make sure they stay relevant in this rapidly evolving world.
- Safer Selling. We worked in partnership with agents to develop a Remittance Holding Capacity concept. It will ensure agents have the freedom and flexibility to sell tickets even in the busiest season, better manage airline risks, and provide an even greater assurance to travelers.
- More Security Options. We are rolling out a new, voluntary type of financial security for travel agents in the form of Global Default Insurance (GDI). For agents, GDI will present a cost effective and flexible alternative to bank guarantees and other types of security. At the same time, for airlines, this insurance solution will provide strong and reliable coverage which increases the certainty of claims in case of a default.
- New Payment Methods. IATA EasyPay is a voluntary pay-as-you-go solution based on the e-wallet concept.
For the 58,000 agencies in the BSP, NewGen ISS will mean choice, flexibility and cost-efficiency. And the over 400 airlines in the system will have faster settlement, safer funds, and a lower cost of distribution.
I used to run an airline, and I know that the agent-airline partnership is essential. Change is also essential. And IATA is putting all its efforts into supporting the success of this change to ensure that the NewGen ISS promises are kept.
After so many decades of reliable BSP operations, most people take it for granted. They rarely even think about how the complex system works. We are modernizing the system, but we are determined to maintain that very old-fashioned trust.