Business Economic Notes 1
Travel Agents
These notes are issued to Inspectors of Taxes to assist them in examining accounts. They are intended to provide a general background to the trade, with some explanation of its most important features. Business Economic Notes are not intended to provide an exhaustive or definitive picture of any particular trade or profession.
Contents
1 Introduction
- Travel agent
- The tour operator
- General sales agent
4 Professional Requirements and Trade Associations
- Professional requirements
- Trade associations
- Shuttle market
- Scenic tours
- Coach hire
- Theatre tickets
- Car hire
15 Profit Rate and Product Mix
16 Factors Which May Affect the APCR
(Average Percentage Commission Rate)
- Free offers
- Commission sharing arrangements
- Sale of airline tickets
- Change of ownership
17 Operating Costs
Appendices
Appendix 1 - IATA Approval Requirements
(International Air Transport Association)
Appendix 2 - List of Travel Trade Associations
Appendix 3 - Scale of ABTA Subscriptions
(Association of British Travel Agents)
1 Introduction |
The British Travel Marketing Industry is geared to the sale of foreign rather than domestic products. The all inclusive foreign holiday or package is by far the most popular form of holiday. Apart from package holidays there is an increasing trend towards 'seat only bookings' and car ferry travel to satisfy the demand for self-catering and time share holidays.
Department of Trade and Industry statistics show that there has been a substantial growth in the number of holidays sold rising from 3.7 million in 1977 to 8.5 million in 1984.
Holiday travel is still mainly in the hands of the large travel companies, with their numerous offices. But there has been a steady growth in Independent Travel Agencies, assisted by the availability of on-line view data systems. However it is true to say that as the small independent businesses become more successful they are absorbed into larger chains. The trend is for larger companies to grow more rapidly at the expense of the smaller business.
The strength of the travel industry as a whole lies in business travel. The growth and basic reliability of this market combined with the fact that the business traveller is usually able to spend more money than the holiday maker, makes him an attractive proposition. There are many reasons for the persistent strength of the business travel market. One of these is the act that companies which were once confined to one country or even one area are now spreading their activities. New areas of business travel such as conference and exhibition travel have opened up over the years. More recently incentive travel, used to reward employee performance, has been added.
2. Definitions |
Travel agent
A travel agent is simply a holiday or travel broker, offering to the public a whole range of travel products. He or she will also be able to cater for individual travel and accommodation requirements and obtain for the customer the best possible deal in much the same way as an insurance agent attempts to get the most competitive quote for a customer. In general the travel agent makes the customer aware of all his or her options.
The travel agent will also provide other services such as car hire, travel insurance, arranging passports and visas, obtaining travellers cheques, foreign currency and even arranging advance car park bookings at airport terminals. Quite often he or she also acts as an agent for selling local bus passes, theatre tickets and tickets for sporting events.
The tour operator
Tour operators are best described as assemblers of bought in parts who produce the holiday package which the travel agent retails. They plan, organise, finance and sell the complete holiday package, which includes transport, accommodation and food. Some tour operators are also travel agents and sell their holidays through their own retail outlets.
Tour operators who either charter aircraft or charter seats on scheduled airlines are required to hold an Air Travel Organisers Licence (ATOL). The Civil Aviation Authority (CAA) are responsible for granting licences.
General sales agent
A general sales agent is the sole ticket agent for an airline or shipping company and earns a higher commission than a normal travel agent, usually 12% - 15%. The general sales agent retails tickets for a particular airline or shipping company to tour operators, travel agents or direct to the general public.
3. Safeguards |
In purchasing a holiday, the consumer pays money in advance for the fulfilment of a dream but cannot inspect the purchase beforehand or exchange it afterwards. He or she can have this dream shattered or at the very worst lose money or be stranded abroad. There is no specific legislation safeguarding the consumer. However under the Unfair Contract Terms Act 1977, a consumer is able to seek redress in the event of failure to obtain what has specifically been paid for, but not for disappointed expectations. The consumer can, of course, seek redress, under the Act, for gross misrepresentation.
Another safeguard is the Consumer Credit Act 1974, under which anyone buying a holiday or ticket on credit, either by a loan or credit card, can be indemnified.
Safeguards relating to the financial failure of a travel agent are provided by the ABTA (Association of British Travel Agents) bonding scheme. Monies are available under the bond to protect customers who have suffered a financial loss. Additionally there is also a fund known as the ABTA Retailers Fund and this is available to compensate for any losses above the bonding figure. Generally if is the collapse of a tour operator that places the holiday maker in most difficulties, either entailing loss of monies paid over for holidays or being stranded in a foreign country. In these instances funds available under the ABTA Bond and secondly the Air Travel Reserve Fund administered by the Civil Aviation Authority are used to provide compensation by way of refunds or provision of alternative holiday arrangements and to arrange for the return of stranded holiday makers. Compensation for any unavoidable curtailment of holidays caused either by the collapse of a tour operator or personal difficulties of the holiday maker are usually covered by travel insurance. This is purchased either with the package or separately from the travel agent.
4. Professional requirements and trade associations |
Professional requirements
There are no legal or professional requirements and anyone can set up shop as a travel agent although this is a trade requiring considerable knowledge and expertise. It would be foolish to presume that a novice could manage an efficient travel agency. From the point of view of acquiring professional qualifications a travel agent can become a member of the Institute of Travel and Tourism, M.Inst.T.T. This Institute was set up in 1956 and entrance requires minimum educational qualifications e.g. BTEC National Diploma (Associate Membership), BTEC HND (Membership), relevant degree. Entry may also be gained by sitting the Institute's own examination or writing a professional paper.
Trade associations
From a commercial point of view, a travel agent finds it advantageous to belong to the main trade associations, i.e. ABTA and IATA (International Air Transport Association). Apart from the advantages of being represented by a trade association such as ABTA, membership is seen more and more by the public as indicating a safe and reliable agent.
Travel agents may be either affiliated or full members of ABTA. Until 1982, for full membership they required:
- At least three years experience as an affiliated member.
- Fixed premises.
- At least two employees with travel agency experience.
These conditions were amended in 1982 and the changes are detailed below. All new travel agents are required to provide bonds to indemnify the ABTA Retailers Fund until the end of their first years trading or annually thereafter, until their accounts are cleared, without qualifications under the ABTA accounts rules.
The minimum bond for new members if £7,500 and for those with limited liability £5,000. The latter must also have paid up share capital of not less than £5,000.
Existing members may also be required to provide similar bonds if it is thought necessary that they should do so.
Despite the introduction of the Restrictive Practices (Services Order 1976) certain conditions and clauses in the ABTA rules still remain, being upheld in the courts as being in the public interest.
As at 31 January 1977 the three main heads under which major registerable restrictions remained were:
- Stabiliser (exclusive dealing between ABTA tour operators and ABTA retail agents).
- Limitations of the use of premises of retail agents.
- Price maintenance by retail agents.
In 1982 the Restrictive Practices Court upheld the stabiliser clause because, in its opinion, ABTA can only protect the public monies if it stops members from dealing with outsiders, over whom ABTA has no control.
Changes were however brought to the second and third items after the courts ruled against the standard ABTA agency agreements and their codes of conduct which stated that agents must sell at prices determined by tour operators. Therefore, agents can now remit the net price to the operator less their commission which they can use if they wish to cut holiday prices.
The Premises Rule was also amended and there is now no necessity to have separate premises. Any kind of mixed business use is theoretically possible which could mean higher profits and a spreading of overheads. However an ABTA and non-ABTA agent may not share the same premises.
Additionally, travel agents are no longer required to employ a minimum of two experienced assistants. Whilst it is felt in the travel industry that this will affect standards, it also means that more part-time staff can be employed, thus cutting overheads.
Membership of IATA confers the right to retail airline tickets and receive commission on sales. There are stringent security and financial requirements for approval to be granted (see Appendix 1).
A list of Travel Associations is given in Appendix 2 and Appendix 3 contains a scale of ABTA subscriptions.
5. Air Travel |
In view of the appointing requirements of IATA, a new agent faces a start-up problem over ticket sales. He or she is not able to earn any commission until he or she has become an approved agent. The new agent can however apply retrospectively for the full rate of commission, as soon as he or she is formally approved, on all sales transacted during the processing of the application. These sales must have been made through an airline office and not through another agency.
Selling airline tickets is a lucrative part of a travel agent's business which will handle either tickets of scheduled airlines or the discounted tickets of the "seat only" specialist tour operators also referred to as Inclusive Tour Tickets.
"Seat only" is now one of the fastest growing sectors of the UK travel industry. In 1986 as many as 1.5 million people are expected to buy a seat only ticket. It is therefore a lucrative market for the travel agent who besides selling tickets also has the opportunity of selling extras such as car-hire and travel insurance. Travel agents are also offered additional incentives for selling these tickets either by way of free seats or bonus commission schemes. As an example a travel agent may earn one free seat for every 20 bookings or earn bonus commission of £1 to £2.50 per passenger for every 35 bookings.
Scheduled airlines also provide discounted tickets known as APEX tickets (Advance Purchase Excursion Fare). Tickets are for scheduled flights and are substantially cheaper. However, to be valid, bookings must be made in advance, as stipulated by the airline company. Some agents will permit back dating of such tickets to get around the conditions of issue. Usually such manipulation must be with the connivance of someone employed by the airline.
6. Sea Travel |
Ocean travel is now limited purely to pleasure voyages and there are about 21 shipping companies offering cruise travel in the UK market. The biggest are P&O and Cunard (notable for the QE2).
Cruise ticket sales through travel agents are not restricted, with the exception of P&O which operates a selection system for authorised agents. There are at the moment some 1900 ABTA agents who are authorised to sell P&O cruise tickets. Commission is fairly standard and, apart from the exceptional promotional incentives, varies from 7½ to 9%.
7. Rail Travel |
A travel agent has to obtain an agency agreement in order to sell rail tickets. As with airline tickets a new agent will need to generate a great deal of business before becoming accepted as an authorised agent, with no commission being earned. At the moment British Rail are only keeping agency agreements with agents who have a ticket turnover in excess of £10,000. The basic commission is 7% with a possible 2% to 4% increase depending on volume of ticket sales. Agencies will need to have a turnover in excess of £100,000 to earn the maximum 11% commission. Outlets accepting credit card payments will also earn an extra 0.5% commission.
8. Road Travel |
The latest developments in vehicle technology and fittings have introduced an era of greater luxury, performance and safety to coach travel. This has helped to open up new markets, making a longer coach journey more acceptable especially when there is a toilet, drinks dispenser and snacks service on board.
Coach travel falls into three main categories:
- Package coach holiday (or shuttle market)
- Scenic tour holiday
- Coach hire
Shuttle market
The overnight express coach market, referred to as the shuttle market due to the intensive use of vehicles, has been the fastest developing part of the business in the last few years. The shuttle market is still very much a budget operation which hotels and apartments of no more than 2 star standard or holidays to caravans or camping sites. Camping and caravanning packages have proved to be poor sellers and a large number of companies have now pulled out of the market.
No matter how comfortable the coaches are, the rigours of an overnight journey of twenty four hours are only relished by a few people. Success depends on maintaining a healthy price differential with the air package holiday.
Tour operators who run continental tours can be bonded either by ABTA or by the Bus and Coach Council (BCC). UK coach tours do not need to be covered by any kind of bond.
Scenic tours
Usually operating through summer and winter, operations are a little more up market and concentrated more on the incoming tourist trade especially from America. Scenic tours usually last 10 to 14 days with overnight stops at various points on the tour. There are also the short, cheaper tours, such as the 3 to 5 day trips to Paris, Amsterdam and the Dutch bulb fields, and at the other end of the scale, the 28 day Grand European tour costing around £1,000.
Coach hire
This market is also now opening up. Travel agents do not have much involvement in the bread and butter coach charter hire with nearly all the trade being handled directly by the coach or bus company. There is now an increased tendency for the coach package holiday operators to hire out luxury vehicles aimed at the business market. Businesses are being encouraged to hire coaches for attending conferences or other special business or social events. Executive coaches are fitted out with tables, washroom, bar and kitchenette, with a full meals service is required.
Commission is still a bone of contention with travel agents and there are fairly wide variations. Commission paid by tour operators and coach proprietors can range from 7½% to 10%. One of the largest in the business, now runs an incentive scheme. Whilst theoretically an agent can earn up to 20% commission, based on a percentage increase in sales, it is difficult for any agent to achieve. As an example, if you take an agent whose 1984 summer turnover was £15,000 and trace the businesses 1985 performance and reward:
|
1985 Summer sales |
% Increase in sales |
Bonus commission |
Average commission for all sales |
|
15000 |
NIL |
NIL |
10% |
|
18750 |
25% |
NIL |
10% |
|
20000 |
33.3% |
£125 |
10.625% |
|
22500 |
50% |
£375 |
11.67% |
As can be seen even if the agent increases the business turnover by a third, the bonus is negligible and a massive 50% increase in Revenue will only bring a bonus of 1.67% on total sales.
9. Other sources of income |
Amongst the other types of holidays, which a travel agent may handle the skiing holiday is perhaps predominant. Whilst there is a fairly big market for boat hire, especially for the Norfolk Broads, and barge hire, these are usually booked by direct sales and travel agent involvement is very minimal. A slice of a travel agent's income may come from the sale of theatre tickets, car hire and to some extent, also from advance car parking at air port terminals.
Theatre tickets
Block bookings are a key feature of the theatre ticket market. The market is controlled by major ticket libraries notably the Keith Prowse Group which handles about 80% of theatre tickets sold outside box offices. The libraries either sell direct or via sub-agents and make their profits by buying at a discount. The commission earned on the final price charged to a customer, is around 6% - 7%. Most sub-agents now have a computer link with ticket libraries or directly with the theatre and can give instant information on seat availability and make immediate bookings.
Car hire
The car hire market in the travel trade apart from business travel hire, is a market that has not been fully exploited. In 1984 less than 30% of holiday makers booked a car in advance. With a package holiday, car hire is usually provided as an "add-on". But there is no reason why an agent should not sell car hire separately, possibly offering the client a better deal and earning the business a higher commission. Car hire companies are now more interested in the travel hire market and currently large hire companies offer 15% - 20% commission. Companies such as Godfrey Davis and Avis offer 20% plus a chance to earn a super bonus, for large commission earners, ranging from 33% to 65%. Budget Car Hire now markets a simple all-inclusive hire package which includes currency exchange guarantees and pay agents a flat 10% commission the inclusive cost of car hire.
10. Bucket shops |
This is a derogatory term for the trade which stems from the stock exchange where dealers hawked their dubious shares around in a bucket. There are an estimated two to three hundred shops operating in London usually from small bargain basement premises or back rooms. They will not belong to any of the travel trade associations.
These shops deal in discounted scheduled airline and charter tickets. Such dealings contravene the fare setting authority IATA and are regarded as being illegal by the trade, particularly as the discounted ticket market is draining commission from the legitimate travel trade.
The discounts on airline tickets can be as high as 50% and a bucket shop will re-sell at a discount of 25% - 30% thus making a substantial profit. Legitimate travel agents may be involved in discounting but such are the stringent rules, that if reported, they could lose IATA approval and also risk losing membership of other Travel Associations.
Travellers who have bought a discounted ticket and have completed their journey with no mishaps can congratulate themselves whilst other will encounter such problems as:
- Having paid a deposit or even the full price in advance finding that the shop has closed when tickets are due for collection
- Not having the homeward bound ticket recognised by the airline
There are few official complaints as customers will not risk having their name linked to a dubious transaction nor having to admit to gullibility.
11. Cancelled bookings |
Normally, a holiday-maker is required to pay a deposit and if the arrangements are subsequently cancelled the deposit or part of the deposit is forfeited. Such forfeited deposits are usually retained by the tour operator. In the main however cancelled bookings arise from late changes made by tour operators, usually involving a change of hotel and sometimes even a change of venue. Quite often these changes are made days before an intended departure. They are caused by tour consolidations, a combination of over and under bookings of packages offered by the same tour operator or can be joint consolidates by two or more independent operators.
ABTA has a code of conduct which provides retailer safeguards on consolidations. However, it seems some tour operators are blatantly ignoring the code, which stipulates that there should be no changes or alterations after the final balance payment has been made. Consolidations and their resulting holiday changes are one of the main reasons for the recent epidemic of late bookings. These bookings are becoming more and more attractive as, apart from offering more competitive prices, the holiday maker is reasonably sure of getting the holiday for which he or she has paid.
12. Travel insurance |
Currently travel cover for say a fortnight's holiday to the continent is around £11.85 for an adult and £8.35 for a child. This usually provides cover for medical treatment, luggage loss, holiday curtailment, cancellations and loss of money or documents. An agent selling an independent policy can usually earn 30% - 40% commission but only 10% if he sells the inclusive cover offered by tour operators as part of their package holiday. The cost of insurance cover increases for more expensive holidays to more exotic destinations.
An additional premium is usually required for skiing holidays, the further cover costing around £4 - £5 for seven nights.
13. New technology |
There is now widespread use of view data by travel agents allowing them access to some 90 reservation systems covering most travel products. Most have full alpha-numeric keyboards which enable them to gain access to the reservations systems available on direct dial or through networks such as Prestel and Travinet. More travel principals are installing computer systems to handle their reservations and make these accessible on view data. There is also a later availability service which enables access to certain selected operators. View data is relatively expensive because of telephone costs but has proved to be cost effective for the travel trade with the increasing availability of local call access for most parts of the United Kingdom. Some travel agents are also installing computers in-house to streamline their own services.
14. Communication |
Whilst direct on-screen booking terminals are in use in all major travel companies the telephone has remained a reliable back-up. Most tour operators now have toll-free numbers which enable agents to contact operators at no charge to themselves. British Telecom has now introduced a facility called "Linkline" which is a system of direct dialling free phone numbers, as opposed to "freefone" which is a more lengthy and costly operator based service.
15. Profit rate and product mix |
Independent surveys have shown that the income of travel agents declined in real terms in the four years following 1980. In the main smaller agents have been more affected. This can be attributed to the fact that whilst there has been a growth of passenger volume and sale of airline tickets by an average of 12% per retail outlet since 1980, the prices of inclusive tours and airline tickets have only increased by 12% and 6% respectively. Levels of percentage commission have remained fairly static. However, operating costs, on average, have increased by 30% per retail outlet, with salaries and new technology accounting for a large slice of the increase.
The Average Percentage Commission Rate (APCR) is more relevant to a travel agent, than a gross profit rate. This is because the agency's income is largely made up of commission paid by tour operators, schedule airlines and other organisations, calculated by reference to the value of business transacted or turnover.
In normal circumstances one would expect to see an APCR of around 9%. However the product mix will determine the actual rate. The average travel agent will earn the bulk of his commission from the sale of package holidays and a typical product mix and APCR return could be as follows:
|
Product Mix |
APCR |
|
|
Inclusive tours |
54.5% |
7.9% |
|
Air tickets |
31.1% |
8.3% |
|
Rail tickets |
2.6% |
8.0% |
|
Ferry tickets |
2.3% |
9.1% |
|
Insurance |
1.0% |
33.4% |
|
Car hire |
.3% |
10.7% |
|
Others |
8.2% |
9.5% |
|
APCR = 9.4% |
Included in other income may be interest earned on temporary deposits which can account for up to 1.5% of an agent's total income.
16. Factors which may affect the APCR |
Free offers
Travel agents may offer inducements to customers. These may take the form of a straightforward discount or other offers, such as free travel insurance, ferry service, etc. The cost of these inducements has to be borne from an agent's own commission and could have a drastic effect on the APCR.
This is illustrated in the following examples involving travel insurance and taking an average of 2.5 persons per booking at £200 per annum:
|
Without free travel insurance |
2.5 Adults |
@ £200 |
= £500 |
10% Commission |
= £50.00 |
|
2.5 Insurance |
@ 100 |
= £ 25 |
37.5% Commission |
= £ 9.38 |
|
|
Totals |
£525 |
|
£59.38 |
||
|
|
|
|
|||
|
APCR = 11.31% |
|
|
|
||
|
|
|
|
|||
|
|
|
|
|||
|
With free travel insurance |
2.5 Adults |
@ £200 |
= £500 |
10% Commission |
= £50.00 |
|
2.5 Free Insurance |
= £ |
- Insurance cost |
= £15.62 |
||
|
Totals |
£500 |
|
£34.38 |
||
|
|
|
|
|||
|
APCR = 6.87% |
|
|
|
Commission sharing arrangements
Some tour operators demand a minimum level of bookings before they are prepared to pay commission. Smaller businesses may enter into a commission sharing arrangement with a larger travel agent so that they can continue to offer a wide range of holidays. The small agent, directs bookings through the large agent, who receives the full commission and splits this with the smaller agent. The APCR of both the large and the small agent will be affected by such an arrangement.
Sale of airline tickets
"Non-IATA" agents are not allowed to earn commission on sales of airline tickets, but they will usually sell tickets acting as a sub-agent for a licensed agent. Full commission will be earned by the licensed agent, who will then give the sub-agent a share, usually 4% - 4.5%. The APCR of both parties will be reduced.
Change of ownership
Sometimes on the disposal of a business the old proprietor may retain the right to receive commission in respect of bookings made in the twelve months preceding the sale. In practice, the new agent taking over the business may well have to do a substantial amount of work on old bookings. Arrangements are usually made between the old and the new proprietor, whereby the old agent pays the new agent a sub-commission in respect of work that the latter had done.
Unless the sub-commission is shown separately, the effect will be to depress the overall APCR of both old and new proprietors for the relevant period. Normally any commission accruals are adjusted for in the sale price.
17. Operating costs |
These are high in the travel business and surveys have shown that the level of operating costs as a percentage of income has risen from 85.7% in 1980 to 92.2% in 1983.
Typical average operating costs as a percentage of income appear to be:
|
Staff cost |
43.2% |
|
Accommodation (including rent, rates, light, heat, cleaning and repairs) |
13.9% |
|
Other costs (including general overheads, travel, entertainment, professional fees, insurance and depreciation) |
12.8% |
|
Communications (including telephone, telex, view data access) |
11.5% |
|
Advertising |
3.5% |
|
Interest and bank charges |
1.3% |
18. Records |
The records maintained by a travel agent are usually extensive, in view of the large number of transactions and will typically include:
- Booking cards for each transaction, detailing customer, holiday type or destination and flight, airline or tour company and often also the sale price.
- Sales and purchases ledgers.
- Record of refunds.
- Record of bankings.
- Cash book.
- Supporting bank statements, vouchers, etc.
Appendix 1 - IATA approval requirements |
Qualifications for IATA passenger approval
The United Kingdom Agency Investigation Panel has established the following minimum criteria which have been endorsed by the Agency Board and which must be met by the applicants if their applications are to be successful. IATA approved will not be given to applicants who fail to meet these criteria.
Premises
Premises must be open for business on a regular basis, clearly identified as a travel agency and freely accessible to the general public.
If the premises are not shop premises identified by a fascia sign,
then there must be an adequate name plate at ground level at the entrance
to the building.
Applicants who can demonstrate that their business is solely as a tour
operator need not have premises accessible to the general public.
Office space must not be share with another travel agency or an air
carrier.
Implant locations in locations in commercial firms or organisations
will only be approved for branches of existing IATA approved agencies
meeting certain conditions (see disqualifications).
Security of premises
Applicants must ensure that their premises are adequately protected against burglary. Expert advice on crime prevention can be obtained free of charge from the Crime Prevention Officer at local police stations. The security of the premises will be accepted by the Agency Investigation Panel if all the recommendations of the Crime Prevention Officer are implemented.
Safe storage of travel documents
At the time of application a safe must be installed on the premises meeting the following minimum standards set by the Agency Investigation Panel:
- A minimum weight of 182 kg (400lbs).
- Fitted with both key and combination locks.
- If weighing less than 500 kg (1,000lbs) bolted to the floor or wall or cemented into the fabric of the building.
- A limpet alarm device or an alarm sensor fitted to the safe may be accepted in place of the secondary locking device, i.e. the safe may be key lock plus alarm. Also, such alarm device would be acceptable as an alternative to bolting for safes weighing between 300 kg (660lbs) and 500 g (1,000lbs).
- Underfloor safes of good quality and adequate internal dimensions are also accepted if fitted with both key and combination locks.
Staff qualifications
Applicants must have at least two full time travel personnel qualifying in one of the following ways:
- Having had a minimum of two years fares and ticketing experience within the last four years, at the time of application, with an IATA approved travel agency or airline ticket office.
- Having successfully completed a fares and ticketing course up to a
standard recognised by the Agency Investigation Panel. Courses recognised
by the Agency Investigation Panel at the time of publication of this
booklet are:
IATA/UFTAA Advanced Diploma
British Airways Fares and Ticketing Course 11
British Caledonian Airways Fares and Ticketing Course
COTAC Level 11 Air (May 1981 and later)
Lufthansa Advanced Fares and Ticketing Course
TRAVIS - British Airways Travel Industry School
Aer Lingus Intermediate Fares and Ticketing Course
Temporary and part-time employees are not counted as qualified staff. Neither is experience gained in the employment of temporary bureaux acceptable.
Financial criteria
The financial aspect of IATA applications is assessed by the Financial Advisory Sub-Committee to the Agency Investigation Panel. Only companies and firms that are financially sound will be approved. Applicants must submit with the application two full sets of audited accounts for their business for the most recent financial year. Businesses which have traded for less than one year must submit two copies of a certified opening balance sheet. These accounts must be accompanied by a declaration, certified by the company's or firm's auditors detailing the following information.
- All scheduled airline turnover for the period of the accounts.
- Three year comparisons of the profit and loss account. If comparative figures are not shown on sole trader/partnership accounts they must be supported by the accounts for the two previous years.
- Details of fixed assets.
- A list of directors and shareholders.
- Loan details.
- Projected industry turnover for the next twelve months.
The minimum financial criteria are:
- A favourable liquidity ratio (current assets to current liabilities) of at least one for one.
- Evidence of profitable trading.
- A minimum issued and fully paid up share capital of £12,500.
Where applicants are wholly owned subsidiaries the latest accounts of
the parent organisation will also be assessed and parent company guarantees
may be sought, where the Financial Advisory Sub-Committee feel there is
adequate financial strength to support them, before granting approval.
A bank or insurance bond may be requested to the value of 1/6th of the
projected annual IATA turnover.
Disqualifications from IATA passenger approval
In addition to meeting the requirements already listed the following circumstances would disqualify applicants from being approved.
- If the agency location is at an airport.
- If the agency location is inside a commercial company or organisation
and servicing principally the travel requirements of such an organisation
and is not meeting the following conditions.
- Being a branch of an existing approved agent.
- Being staffed exclusively by the approved agent.
- Having a separate telephone number where possible.
- Meeting all other criteria (safe, security, staff, finance and
identity).
If the agency is sharing office space with another travel agency, or
an air carrier or another IATA approved location.
If the name used by an applicant agency is the same as or misleadingly
similar to that of an IATA member airline, or IATA itself. The place of
business must also not be identified as an office of a member airline
or group of member airlines.
If the record of an applicant, or any of its managers, shareholders, directors
or officers is unsatisfactory with regard to business ethics.
If any of the directors, or those with a financial interest in an applicant,
or any of its managerial staff has been a director of, or held a financial
interest in, or held a position of management in an agency that has been
removed from the IATA List as a result of defaulting on its Passenger
Sales Agency Agreement, and still has debts due to IATA member airlines.
However, the Agency Board may approve such an applicant if it is satisfied
that such persons did not contribute to the circumstances that led to
the default and that they may be relied upon to comply with the IATA agency
rules and the terms of the Passenger Sales Agency Agreement in the future.
If an applicant is appointed as a General Sales Agent by an IATA member
airline in the United Kingdom or part of the United Kingdom.
·If an applicant is appointed as a General Sales Agent by one or
more non-IATA airlines. However, authorisation to act in that capacity
may be given by the Agency Board if an application is made.
If any material statement in the application is inaccurate or incomplete.
Appendix 2 - List of travel trade associations |
A.B.T.A. Association of British Travel Agents
A.B.C.O.C. Advance Booking Charter Operators Council
A.I.T.O. Association of Independent Tour Operators
B.T.C.A. Business Travel Consumers Association
G.B.T.A. Guild of Business Travel Agents
I.A.T.A. International Air Transport Association
I.T.M. Institute of Travel Managers
I.T.T. Institute of Travel and Tourism
N.A.I.T.A. National Association of Independent Travel Agents
T.O.S.G. Tour Operators Study Group
U.F.T.A.A. Universal Federation of Travel Agents Associations
Appendix 3 - Scale of ABTA subscription |
|
Annual Turnover |
Subscription |
|
|
More than |
Not exceeding |
|
|
£ |
£ |
£ |
|
200,000 |
65 |
|
|
200,000 |
300,000 |
90 |
|
300,000 |
400,000 |
115 |
|
400,000 |
500,000 |
140 |
|
500,000 |
600,000 |
165 |
|
600,000 |
700,000 |
190 |
|
700,000 |
800,000 |
215 |
|
800,000 |
900,000 |
240 |
|
900,000 |
1,000,000 |
265 |
|
1,000,000 |
1,300,000 |
290 |
|
1,300,000 |
1,600,000 |
325 |
|
1,600,000 |
1,900,000 |
360 |
|
1,900,000 |
2,300,000 |
400 |
|
2,300,000 |
2,700,000 |
450 |
|
2,700,000 |
3,000,000 |
500 |
|
3,000,000 |
3,500,000 |
560 |
|
3,500,000 |
4,000,000 |
625 |
|
4,000,000 |
4,500,000 |
690 |
|
4,500,000 |
5,000,000 |
750 |
|
5,000,000 |
5,500,000 |
810 |
|
5,500,000 |
6,000,000 |
875 |
|
6,000,000 |
6,500,000 |
940 |
|
6,500,000 |
7,000,000 |
1,000 |
|
7,000,000 |
7,500,000 |
1,060 |
|
7,500,000 |
8,000,000 |
1,125 |
|
8,000,000 |
8,500,000 |
1,190 |
|
8,500,000 |
9,000,000 |
1,250 |
|
9,000,000 |
9,500,000 |
1,310 |
|
9,500,000 |
10,000,000 |
1,375 |
|
10,000,000 |
11,000,000 |
1,525 |
|
11,000,000 |
12,000,000 |
1,675 |
|
12,000,000 |
13,000,000 |
1,825 |
|
13,000,000 |
14,000,000 |
1,975 |
|
14,000,000 |
15,000,000 |
2,135 |
|
15,000,000 |
16,000,000 |
2,275 |
|
16,000,000 |
17,000,000 |
2,425 |
|
17,000,000 |
18,000,000 |
2,575 |
|
18,000,000 |
19,000,000 |
2,725 |
|
19,000,000 |
20,000,000 |
2,875 |
|
20,000,000 |
- |
3,000 |
Produced by the Inland Revenue
October 1990
© Crown Copyright 1990
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