Karnataka HC stays weekly settlement scheme: Travel agents

The new bill payment cycle reducing credit period of agents from 15 days to seven came into effect from Jan 1

Giving relief to travel agents, Karnataka High Court has stayed the implementation of International Air Transport Association's weekly billing settlement plan. In an interim order passed on Monday the Karnataka High Court said the weekly settlement scheme be put on hold, the Travel Agents Association of India said in a press release.

The new bill payment cycle reducing credit period of agents from 15 days to seven came into effect from January 1. Travel agents' associations have been opposing the move fearing that the move will adversely impact the agents and could lead to defaults and closures but the change in billing cycle is seen as a positive for airlines as it improves their cash flow. It will benefit airlines including Air India and Jet Airways which are under pressure from vendors and creditors to pay dues on time.

IATA’s billing settlement plan (BSP) is as a payment gateway for travel agents. The weekly payment system was to come into effect from last June but the implementation was deferred due to protests from the agents.

Travel Agents Association of India filed a writ petition in the High Court against the IATA's decision. On Monday after hearing lawyers of travel agents and IATA, the court passed interim order, TAAI said in its release.

Under the BSP agents do not immediately remit collection from ticket sales to airlines and under the current system make four payments in 30 days. As per the old system the agents get a credit period of fifteen days to make payments. Low cost airlines in India are not BSP members. Now the fifteen day credit period will remain in force.

But in new scheme being implemented from January 1 agents will have to remit ticket sale collections after seven days. So for tickets sold between 1st to 7th of the month payment will be made on 16th of that month and so on.