The Two Perspectives On New Billing Cycle

This is what most of the Indian travel agencies have been suspecting for long. IATA has given its go ahead for the new billing cycle. The BSP, as is called in the common travel parlance, referring to the billing settlement period, has now been reduced to a week time from the current fortnightly time period. This means that beginning June 1, the travel agencies will have to make weekly payment to the airlines for the ticket sales. With this coming into effect, the sale of domestic and international flights tickets is expected to usher in better cash flows and better management of finances by agencies as well as the airlines. With better cash flows the airlines which are in the midst of financial problems are expected to meet their recurring financial obligations in a better way.

There are two differing opinions on what the impact would be. One viewpoint holds that the move is likely to hurt two types of travel businesses, one which are small travel agencies and the second, the agencies which have considerable corporate exposure. The small travel agencies would be hurt because it might not be possible for them to immediately switch-over to the new system. The larger agencies would be able to manage their affairs better due to their resources.  Similarly, the agencies which are more in the corporate travel niche and offer cheap air tickets to the large corporate as well as extended payment settlement facility will now have to convince them for early payment.

The other viewpoint, which is more positive, holds that there will be concrete and serious efforts to manage the finances by the airlines. Even the corporate benefits being distributed will be pruned to more reasonable levels. The cheap international flights might still be offered but it is just that the payments will have to be realized in lesser time periods. Overall, better efficiencies and cash flow will happen throughout the industry.

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