Unable to meet conditions set by IATA
KUWAIT CITY, Aug 20: Nearly 50 travel and tour agencies in Kuwait are threatened of closure due to their inability to meet conditions set by the International Air Transport Association (IATA), which has demanded that they raise their bank guarantees to KD75,000 in order to maintain IATA accreditation and continue issuing tickets, weeks after the insurance company that covered them ended its services, reports Al-Rai daily.
IATA-accredited travel agencies are required to provide financial security in the form of a bank guarantee or an insurance order to sell airline tickets and to settle those sales through the Business and Settlement Plan (BSP). In line with IATA regulations, travel and tourism agencies rely on three methods for insurance coverage — banking insurance, proprietary system of insurance companies, or the new ‘Easy Pay’ method. The recent exit of a Jordanian insurance company from the travel market has put the agencies in a difficult situation.
Though insurance services are available from a French insurance company, the stricter stipulations of the French insurer are not acceptable to many small agencies. Faced with the prospect of blocking such a large sum of money as a bank guarantee, and without any affordable alternative insurance available to them, many small travel agencies may have to close down their business. According to industry veterans, around 60 percent of travel offices in Kuwait are likely to be shut down due to their inability to put up with the required guarantee.
They pointed out that the new demand by IATA could jeopardize the travel and tourism sector in the country – with the erring agencies forming nearly 35 percent of the total number of travel agencies in Kuwait. Sources made it clear that 28 travel agencies in Kuwait modified their status during the first grace period that ended July 23 and nearly 50 travel agencies stand to lose out on the lucrative travel business after the August ending deadline.