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Threat to Travel Agencies

Threat to Travel Agencies

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Thousands of jobs may be lost in the downstream sector of the aviation industry as technology, poor policy implementation threaten the existence of travel agencies in Nigeria. Chinedu Eze writes that without urgent intervention by government, the country will lose the multi-billion-naira market to foreign operators.

About 20 years ago, a travel agency may have about 10 to 20 workers who canvass for customers, book flights for them and sensitise would-be travellers. Bigger travel agencies had more than the average number of workers and travel agencies dotted the major cities in their thousands with full bloom in Lagos, Kano, Port Harcourt, Ibadan, Abuja and other places. But today, thousands of those workers have been lost to technology.

With Global Distribution System (GDS), flights emanating or coming to Nigeria could be booked from any part of the world.

THISDAY learnt that poor regulation by government agencies has also opened the door wide for illicit travel operators who ubiquitously hijack the jobs and services of genuine travel agencies, book tickets for people and most often disappear with the money paid by the travellers. This erodes confidence in the business and the interlopers have free reign because the sub-sector is not closely monitored by the regulatory agencies.

It is estimated that over N2 billion is lost annually to these illicit operators who short-change travellers and those who book Nigerian flights from overseas, taking advantage of the GDS.

So the sub-sector is characterised by poor regulation, neglect of the downstream sector of the aviation industry, infiltration of the industry by all and sundry and poor application of the International Air Transport Association (IATA) rules.

Challenges

In a breakfast meeting last week, organised by the Aviation Safety Round Table Initiative (ASRTI), an aviation think-tank, in Lagos, the President of the National Association of Nigeria Travel Agency (NANTA), Bankole Bernard encapsulated the problems faced by Nigerian travel agencies in a presentation titled, ‘Challenges of Travel Agencies in Nigeria.’

He lamented that the air travel sub-sector has been eroded by impersonators who were neither members of NANTA nor are registered by the Nigerian Civil Aviation Authority (NCAA) and who damage the image of registered and recognised travel agencies in the country because they issue fake travel tickets, defraud travellers and because they are not registered they cannot be traced.

He said the New Generation of IATA Settlement System (New Gen ISS) introduced by IATA allows anyone in and out of Nigeria to issue tickets, thereby depriving the government its five percent remittances, and revenues meant for local travel agencies, noting that these challenges have continued to drive genuine travel agencies out of market.

Bankole said while IATA promised that the system would be faster, safer and more cost effective, the reality was that the system is only killing local travel agencies and increasing the level of fraudulent activities by impostors across various countries.

The NANTA President stressed that all these challenges may not have emanated in the first place if the NCAA had put in place laws to protect the downstream sector.

“IATA should not come into our country and dictate for us how to run our business. There must be laws put in place for IATA to adhere to. We don’t want foreigners coming into the market and taking over our businesses,” Bernard added.

Effective Regulation

He advised that to properly regulate the sector, travel agencies would have to register with NCAA and NANTA, so as to properly monitor activities of the travel agencies, adding that concerned government agencies should create enabling environment for the growth of the downstream sector of the aviation industry.

Bernard, insisted that there should be proper regulation of the industry through local rules, creation of a data bank to keep record of activities, introduction of policies that protect consumers and practitioners, emphasis on local content law to protect and reserve the downstream sector for citizens of the country. He also suggested regular stakeholders meeting on issues affecting the industry.

“The downstream sector of the industry is critical because without travel agencies airlines will not have passengers to fill their airplanes so we play important role to ensure that airlines are flying. Travel agency business should be profitable in the long run. It is not so these days due to poor regulation of the sub-sector. So we demand more effective regulation of the downstream by NCAA,” the NANTA President said.

Economic Downturn

The President of Aviation Round Table and also the regional President of Sabre Travel Network, Dr Gabriel Olowo, in his presentation, ‘Declining Air Booking by Nigerian Travel Agencies’ said in addition to other factors, economic downturn in the last four years had adversely affected the sub-sector. He said in 2014, travel agencies recorded 4, 057, 645 bookings, which decreased to 3,789, 210 in 2015, representing a downturn of seven per cent.

In 2016, it upped a little but still lower than 2014, by rising to 3, 995, 196, recording increase to 5 per cent compared to the previous year and in 2017 it slumped further to 3, 781, 256 with 5 per cent loss and went further down in 2018 to 3, 598, 526 with a loss of 5 per cent of the market.

“Nigeria business trend since this present regime (2015) has been downward and it may continue,” said Olowo whose Saber Network is one of the largest GDS in the world.

He noted that in the past major pre-occupation of travel agencies was selling of tickets but now they sell hotel and destination, adding also that in the past airlines see travel agents as trusted partners but the airlines don’t give that recognition to them anymore.

“This has affected ticket sales. Nigeria accounts for 50 per cent of all the bookings in West Africa but there is increasing decline in ticket sales since 2015. This means that the downstream sector is becoming extinct. 2019 has started with challenges. But election has ended so we go back to business,” Olowo added.

Facing Extinction

The Chief Operating Officer (CEO) of Medview Airline, Alhaji Muneer Bankole, who also owns a travel agency and whose agency predates his airline business, said the threat to travel agencies was real and noted that in the past those who wished to retire in the aviation industry established travel agencies which engaged in honest and transparent business.

“NCAA needs to know that apart from licensing and regulating travel agencies and airlines, it is also their responsibility to encourage them to grow. Our airlines used to be 26 in number but today many of them are gone. Revenues are dwindling, there are too many challenges; travel agencies should form alliance and work together instead of working at cross purposes,” Bankole advised.

He appealed to the regulatory authority to seriously look at the problems inhibiting the growth of travel agencies, stressing that travel agencies create employment, adding, “In those days we had those employed as marketers who interact with possible travellers and seek their patronage. We have to note also that the increase in the value of dollars in 2015 affected the aviation industry, so we plead that government does not allow further fall of the value of the naira; otherwise, it will kill the industry,” the Medview boss also said.

A senior official of British Airways, Adetutu Otuyalu, while reacting to the challenges faced by travel agencies currently, noted that the operators are very important to British Airways because over 50 per cent of passengers for the airline come from travel agents, so BA cannot underrate them.

“But there is always multiple booking for passengers from different travel agents but at the end, one travel agent would sell the ticket.

“This makes airlines to lose money. We know that corporate organisations move from one agency to another, an attitude that only happens in Nigeria, but BA will continue to support travel agencies but we hope that there should be stronger regulation put in place to check the stated excesses,” Otuyalu said.

Regulation

Speaking on behalf of the regulatory authority, the Director of Air Transport Regulations, NCAA, Group Capt. Edem Uyo Ita (rtd), remarked that there are at least 600 travel agents on the portal of IATA, while only 200 of them were NANTA members and just 157 are on the registry of NCAA.

He insisted that IATA was violating the country’s law through its conduct, noting that the regulatory body could not regulate an agency, which doesn’t register with it.

Ita, however, admitted that the NCAA regulations needed to be tightened in order to plug all the loopholes in the system, especially among the travel agents in the country.

“We agree that we are poor with our regulations, but we have to take up IATA too for violating Nigeria law and NCAA regulations. IATA doesn’t consult with NCAA when coming up with charges or new regulations for the travel agencies.

“Yes, NCAA has not been forthcoming in its regulations because people don’t report things to us. Before IATA can admit anyone into its platform, it should first of all ask them to show proof or registration with NCAA.”

IATA Clarification

The International Air Transport Association (IATA) in a statement made available to THISDAY has clarified that the NewGen ISS (New Generation of IATA Settlement Systems) is not a program that is specific only to Nigeria. It represents the modernization of the IATA Billing and Settlement Plan (BSP) used by more than 50,000 IATA-accredited travel agents around the world. NewGen ISS is being rolled out progressively to all 180 BSP markets.

“IATA worked collaboratively with travel agent representatives to introduce NewGen ISS. Forums such as the Passenger Agency Program Global Joint Council (PAPGJC) and Agency Program Joint Councils (APJCs) enabled IATA’s travel agent partners to contribute to the development of NewGen.

“Among the benefits of NewGen ISS is strengthened protection against fraud through an enhanced risk management framework for travel agents. Furthermore, NewGen ISS offers travel agents three levels of accreditation, which allows them to choose the level that best matches their business model.

“The new accreditation models are making it easier for local Nigerian travel agents to become IATA-accredited through a lighter option (GoLite). This model operates on a pay-as-you-go basis, thereby minimizing financial risk, while facilitating accreditation for small and mid-sized businesses,” the global body said.

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