IATA believes its billings and settlements plan (BSP) system that supports air travel industry transactions has held firm during the liquidity strain facing airlines and travel agents during the Covid-19 crisis.
The association, which operates the industry’s financial settlement systems, says it typically processes $1.25 billion in industry funds on a daily basis. But the grounding of passenger flights have hit all players in the air travel sector.
“It has been very difficult because everybody was facing the same problem, a shortage of cash,” IATA director general Alexandre de Juniac tells FlightGlobal. “It was true for the airlines, true for the travel agents. Everybody was very short of cash. We were facing also bankruptcies, so the strain on the system was extremely high.
“But the system has been designed, not only for normal situations, but also to cope with crises. During the crisis we have also adapted the system to be able to face this new requirement and these new constraints, successfully. So we have accepted flexibility without compromising the interests of the participants.
“I think the compromise has been okay. Up to now the system is working and I think it’s a good guarantee for everyone, that you have a reliable, solid and robust payment and settlement system to guarantee the flows of money are properly routed and managed.”
He adds IATA has also been able to convince some governments to provide guarantees to airlines from their countries to ease the pressure.
But he adds: “It’s a permanent concern. We are managing it every hour, every day of the week.”
