Leading UK travel agent defaults on PIA’s £650,000

Is national carrier’s second biggest selling agent in UK

KARACHI: A leading travel agency in the United Kingdom has defaulted on payments to various creditors including £650,000 that it owes to Pakistan International Airlines (PIA).

Travel agents have to settle accounts with airlines after every fifteen days of making sales. If they fail to do that, they are delinked from the payments system, which is controlled by the International Air Transport Association (IATA).



It remains unclear how much the particular travel agent owes to other airlines but a PIA official said that Pakistan’s national flag carrier is not among its largest clients.

No one was ready to disclose agency’s name.

But it was PIA’s second biggest selling agent in the UK and had sold tickets worth £4 million in the last year, the airline said.



“Repayments in case of a default are made on pro rata basis from the security the agent has deposited,” said a former PIA marketing official. “How much of it was covered in PIA’s case could be anyone’s guess at the moment.”



PIA did not say how much of £650,000 was covered by the bank guarantee of the travel agent. The bank guarantee normally equals travel agent’s average sales of five weeks.

But another airline official said it was unlikely that PIA will lose money. “A travel agency licence costs a lot in UK. The travel agent would never want to lose that. In any case, he hasn’t declared bankruptcy.”

Travel agents have to strictly abide by IATA’s bill payment cycle. The cash collected against sale of tickets is remitted to the airlines under a system called Bank Settlement Plan.



PIA sells around 97% of its seats through travel agents against the global average of under 70%, officials say.

However, travel agents also play a major role in creating wider market for airlines. For instance, they make sales on credit to corporate clients, which airlines never do.

“And it’s particularly harsh when a payment cycle is missed and IATA blocks the agent out,” a local travel agent said. “Even if the agent has some cash to remit, he is unable to do it.”

Published in The Express Tribune, November 11^th, 2015.

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