IATA stops Spring Travels from selling tickets after Rs. 120 crore payment default

Jet Airways is likely to face the maximum impact as a large chunk of dues is meant to paid to that airline

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Spring Travels based out of Delhi has sent airlines into a tizzy after defaulting on a payment of about Rs 120 crore for ticket sales in March. This is said to be one of the biggest defaults in the travel trade in India.

According to industry sources, the International Air Transport Association (Iata) has now stopped Spring Travels from selling tickets till it makes the payment as per a BS report. Travel agents participating in Iata's billing settlement plan (BSP) are required to make fortnightly payment for tickets sales.

Iata collects the amount from agents and distributes it to airlines. Thus, for tickets sold between the first and 15th day of each month, the payment has to be made by the 30th day and so on. Failure to make the payment on the scheduled date is treated as default and Iata can stop the agents from issuing further tickets. Iata could even terminate the defaulter’s membership. A termination could mean a blacklist by airlines.

Asked for a reaction, Mandeep Singh Anand, chairman of Spring Travels, admitted to the default. "Everything will be fine by next week,'' he told Business Standard.

Agents are required to furnish a bank guarantee or an insurance guarantee to the Iata BSP. This guarantee is in relation to 35 days of sales done by the agency in the last year and is reviewed and renewed each year. Airlines may also insist on a separate guarantee from the agents. On the basis of these guarantees, airlines cap the number of tickets an agent can issue each month.

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