Travel agents being hit by “colossal” fines from airlines in the form of ADMs (agency debit memos), say airlines are using the fines as a way to drive additional revenue for themselves.
Airlines slap the fines on travel agents whenever tickets are not issued in compliance with the fare conditions. Travel agents have no option but to pay the fines which are processed through the IATA BSP office. Agents are given just 14 days to dispute the ADM which the airline can either accept or reject.
The penalties have now become so high that one agent revealed some travel agencies in Dubai owed airlines “hundreds of thousands of dirhams” in the admin fines.
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Mano Chandra Dhas, country manager, UAE, Alshamel International said: “Today we sometimes are debited colossal amounts. There are cases where a single ticket can create a debit of over AED 20,000 - that’s a lot of money.”
“These debits are not infrequent. Every travel agent in Dubai faces this problem. Some could owe airlines hundreds of thousands of dirhams.”
“I personally believe that some airlines are looking at the ADMs as a revenue stream,” he added.
To make matters worse for front line travel agency staff, Dhas revealed that it was common practice in the industry for some travel agencies to pass on the fines to the agent themselves. “Defaulting staff can actually see several months salary completely disappear,” said Dhas. “It is therefore a huge issue for our front-line staff.”
The problem of ADMs is exacerbated by the fact that many airlines such as British Airways contract out the collection of fines to third parties based in South Asia – who work on a commission basis, and are paid according to the revenue they bring in, making them extra vigilant in their efforts to flag up any agent violations and chase payment.
The row over ADM policy has escalated in recent weeks, as the Dubai Travel and Tour Agents Group (DTTAG) has complained to British Airways that ADMs issued by the carrier are “too high” believing that the airline is using ADMs as an “additional revenue stream”
Paolo Derenzis, regional commercial manager Middle East for British Airways told ATN that following complaints from the trade, steps had been taken to try to reduce the number and value of ADM's being issued by the airline. “Following valuable trade feedback, we have reduced the value of ADMs for Ticketing Time Limit violations and apply a maximum ADM value by cabin," he said. "On the ADM we will show the ‘capped value’, if applicable, and the true value the ADM should have been.”
Dhas said it was high time IATA stepped in and clamped down on the way ADMs are regulated. “In my personal opinion, there should be a cap on what an airline may debit a travel agent. It should only be a deterrent and not an income stream for the airline. But IATA today just does what the airlines want them to do.”