Cox & Kings is initiating legal action against International Air Transport Association while sister concern ezeego1 is downsizing its business after being suspended from selling airline tickets on credit.
IATA decided to review the tour operator’s credit worthiness on June 28 after it defaulted on commercial paper payments of Rs 150 crore. eezego1, too, was suspended from selling tickets because of common ownership.
Cox & Kings defaulted on its ticket payments worth $0.84 million (about Rs 5.7 crore) last week, as customers withheld payments following IATA action. The move has also hit ezeego1 hard as it earns over 90 per cent of its India revenue from sale of air tickets. ezeego1 operates in B2B travel space and is owned by Cox & Kings promoters.
“Overnight ezeego1’s business has come to a halt. It can't sustain,” said a source familiar with development. Around 100 employees of ezeego1 have been asked to leave, he said.
IATA has asked the tour operator to prove its credit worthiness but in absence of credit and customer payments it has become difficult for Cox & Kings to pay.
IATA said it was in dialogue with Cox & Kings to explore a resolution. On their part, the boards of Cox & Kings and eezego1 have decided to take legal action to claim damages from the global airline body.
“IATA failed to appreciate that Cox & Kings was unable to collect payments due to its own unlawful action of suspension which prompted customers and agents to withhold their payments,” Cox & Kings said. The tour operator further added it had given bank guarantee and had insurance policy to secure payments of three billing cycles.
In a statement ezeego1 said it had not defaulted on its payments yet. “This has severely impacted the reputation of the brand and has affected our business operations,” ezeego1 said, adding it has already sent a legal notice to IATA.