EXCLUSIVE! As deadline for BSP deposit draws, Kingfisher gets the jitters

Neelam Mathews

March 8, 2012  

 

Ailing Kingfisher Airlines is working hard to get some cash to pay for the security deposit for IATAs Billing and Settlement Plan (BSP) for which the deadline is March 10, Aerospace Diary learns. If it is unable to meet the deadline, the carrier will be in a real hot soup as it can then no longer sell through agents (including online travel agents) that sell 70% of its inventory.

 

We also learn cash for fuel bought from HPCL will last only till tomorrow.

 

Kingfisher has already defaulted and been suspended for participation in the IATA Clearing House (ICH). “This is because the airline did not settle their ICH account within the stipulated deadline. Kingfisher's participation in the ICH will be reinstated after the airline fulfills the ICH requirements,” said an IATA spokesman.

 

ICH is for interlining payments clearances. This means now international carriers taking KFAs passengers to onward destinations will no longer offer credit. Meanwhile, IATAs Billing and Settlement Plan (BSP) is for all sales done by local travel agents through BSP by airlines. BSP is a system designed to facilitate and simplify the selling, reporting and remitting procedures of IATA Accredited Passenger Sales Agents, as well as improve financial control and cash flow for BSP Airlines. The procedure is simplified as agents issue one sales report and remit one amount to a central point and airlines receive one settlement covering all agents.

 

We learn that IATA had asked the carrier to pay an additional deposit for payments in future. We could not confirm if the ailing carrier was able to do so. “IATA does this to protect its member airlines,” said an official.

 

Kingfisher was helped by some travel agents recently as they paid in advance for bulk tickets. Many say this has resulted in predatory pricing. However, Sanjay Aggarwal, CEO, confirmed to Aerospace Diary on March 6 when queried if this had resulted in negative revenues. “We never sold a ticket to a travel agent to say go and undercut the fares. This is like a Performance Linked Incentive prevalent in the industry. It is upto the travel agent to decide how much to charge…We have published tariffs on our website.”