Virgin Blue, the low-cost airline based in Australia, is on a collision course with the International Air Transport Association (IATA), the international industry trade group of airlines. The reason: IATA does not allow Virgin Blue to sell tickets for V Australia Airlines, Virgin Blue’s long-haul international airline, through IATA’s international Billing and Settlement Plan (BSP).
The decision by IATA would mean that V Australia cannot sell tickets to travel agents in Australia and other parts of the world, even though a deal with another settlement system, ARC, allows V Australia to sell tickets to travel agents in the United States.
The Billing and Settlement Plan is a worldwide system that assists settlement for airlines and agents in about 160 countries and territories. Over 80% of airline revenues worldwide are ticketed by IATA travel agencies in the system.
David Lloyd, executive of Virgin Blue, had discussed the issue recently with Giovanni Bisignani, director-general of the International Air Transport Association, at the National Aviation Press Club of Australia.
According to the newspaper The Australian, Bisignani had told David Lloyd that, according to the rules, V Australia had to obtain its air operator’s certificate (AOC) before it could use IATA’s settlement plan.
IATA has refused to give V Australia a code that would allow it to sell tickets through the Billing and Settlement Plan notwithstanding requests from the airline and the Government of Australia.
Bisignani, the newspaper reported, told the executive of Virgin Blue that an accounting code could only be supplied to airlines with an AOC and could be changed only if member-airlines agreed to do so.
The Australian quoted Giovanni Bisignani as saying: “When you handle US $340 billion, the rules of the game must be followed very strictly. This is something Virgin Blue, and any other airline, must understand.”
The International Air Transport Association, headquartered in Montreal, Quebec, Canada, represents about 230 airlines comprising 94% of scheduled international air traffic. The organisation represents, leads and serves the airline industry in general.
Virgin Blue said in a statement that it had been trying for 9 months to get a permanent code to access the Billing and Settlement Plan and had provided IATA with a letter of confidence from CASA about its certificate.
Charging IATA with “acting like a cartel,” the Virgin Blue statement continued: “V Australia would deliver huge benefits to Australian and regional tourism and introduce a new level of competition to incumbents United Airlines and Qantas, both of which are members of IATA. It would seem, with the support of the industry, air travellers, governments and the tourism sector, and the huge commitment we are making in the midst of the aviation industry in crisis, IATA’s book of rules is the hardest roadblock, an unnecessary barrier to entry for Australia’s new carrier.”
V Australia has been granted rights to fly to South Africa. According to Brett Godfrey, chief executive of V Australia, the airline “is still looking at October 2009, about the time it will receive its fifth Boeing 77-300ER, to start five services a week on the South Africa route.”
V Australia is expected to begin flights between Australia and the United States on December 15, 2008. The airline was given permission by Australian regulators on July 24, 2007, to operate 10 flights a week to the United States, and the plans were approved by US regulators on February 15, 2008, based on the signing of an open skies agreement between Australia and the United States.
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