IATA suspends Kenya’s Fly540 from BSP

Fly540 (5H, Nairobi Jomo Kenyatta) intends to take legal action against the International Air Transport Association (IATA) after it suspended the Kenyan low-cost carrier from its electronic Billing and Settlement Plan (BSP) with immediate effect. Chief Executive Officer Don Smith told ch-aviation the suspension had no impact on the airline as it had not been part of the BSP for two years. “We have not been in the IATA BSP for over two years. It has no impact on us. We do not want to be in it. We are suing IATA for what we believe to be the way IATA has handled this,” he told ch-aviation by email. “We sell mainly direct. We used the BSP to ensure travel agents paid in a timely manner. However, a major travel agent defaulted. The BSP did not cover our losses so we pulled out,” he explained. The airline’s suspension was confirmed to ch-aviation by IATA spokesperson Perry Flint, who declined to elaborate on the reasons. This follows after IATA advised that, under the provisions of IATA Resolution 850 Attachment F, which lays down the procedure for the suspension of a BSP airline, travel agents should immediately suspend all ticketing on behalf of Fly540. Agents were also advised to immediately stop using Fly540’s name and numeric code as a ticketing airline and discontinue the use of automated systems to process refunds or other credit/debit transactions on behalf of Fly540. Under BSP rules, IATA is mandated to suspend an airline if it violates any of the plan’s participating requirements. These could include, among other things, the failure to pay outstanding amounts due, the loss of a carrier’s IATA code, or the cessation of its operations. BSP suspension has no implication for the airline’s continued IATA membership. The BSP system allows accredited travel agents to book tickets and manage the payments for airlines. Fly540’s suspension means passengers will no longer be able to book or pay for flights through travel agencies settling through the BSP. Regarding IATA’s regulations, the airline has to resolve the circumstances giving rise to its suspension (such as curing its defaults) or the carrier protests in writing before IATA evaluates if the airline is to be reinstated to the BSP. This may require the compensation of any losses to the BSP resulting from the default, payment of all outstanding debt to IATA, and the placing of a security deposit to cover funds at risk for a minimum of one month.