In June 2007, Helen Thompson Travel (HTT), currently an ARTA Canada member, won a favorable decision with the IATA Travel Agency Commissioner (TAC) to assure that IATA complied with CPA and provincial requirements regarding automatic debits to agency bank accounts. The TAC ordered that IATA and HTT work within the framework of the IATA Agency Program Joint Council - Canada/Bermuda to create a compliant PAD agreement acceptable to IATA, HTT, and the Council.

While the parties met several times, IATA never completed its undertaking to finalize an acceptable agreement and, instead, relied on approval by the IATA Passenger Agency Conference airlines to dictate terms to agencies which were not resolved in accordance with the TAC decision. Those terms included imposing economically-unviable conditions on travel agencies which choose to opt-out of the automated debit process and which must thus pay IATA weekly solely via a wire transfer at the agency's expense. Given the high cost of such transfers, agencies are all but forced to participate in the IATA automated debit system.

The New PAD Agreement - CPA and Provincial Concerns

IATA has advised that the new PAD Agreement will provide for more than one bank account which may be specified for various agency indebtedness to IATA. Specifically, IATA is providing agencies with an alternative bank account to be used for fees and charges (Annual Fee, BSPlink) which are not related to the weekly airline sales report. IATA has offered this option to meet requirements in various provinces which do not allow such fees to be drafted from trust accounts.

ARTA Canada has contacted the CPA to determine if the regulations allow for more than one bank account in a single PAD Agreement to be used for different settlement obligations. Neither the old PAD rules nor the new PAD rules address the possibility of more than one bank account in a single PAD agreement. 

The new PAD Agreement requires the travel agency to comply with all provincial regulations, but misses the fact that automated debits to provincial trust accounts are contrary to provincial regulations. As an example, in Ontario, the provincial regulator TICO, does not permit any third party to automatically debit a provincially-mandated trust account where consumer funds are held; nor does TICO allow for debit memos or other non-consumer sales monies to be paid to IATA from such a trust account.

Agencies Forced to Violate Provincial Regulations

TICO claims that as IATA has provided a complete "opt-out" from the weekly automated settlement option, that agencies have the ability to comply with Ontario regulations. However, TICO knows fully well that agencies could not afford to opt-out due to the economic stranglehold imposed by IATA to otherwise pay by costly wire transfers. Since no travel agency could bear the costs of the wire transfer, not to mention the additional $15.00 charge imposed by and paid to IATA by the agency for a wire transfer payment (a charge never approved by the Passenger Agency Conference), agencies are forced to violate provincial regulations which control and safeguard trust accounts.

Furthermore, since agencies are also not permitted to transfer monies out of a trust account into an operating account to pay IATA from a non-trust account, it is TICO itself which has set-up barriers to reasonable compliance with regulations, and TICO refuses to make any attempt to resolve the matter with IATA.

ARTA Canada's Position and Advice to Members

a) The new PAD Agreement, despite the possibility of questionably including more than one bank account, may place the agency in violation of certain provincial requirements.

b) As agencies which chose not to opt-out are obligated to enter into a PAD Agreement with IATA as payee, agencies have no choice but to sign the agreement or to stand in violation of IATA Resolution 832 Section 1.6.2.6.1.

c) ARTA Canada will provide assistance and representation for any member required to defend itself with either a provincial regulator or an appeals tribunal should the regulator take any action against the agency for giving IATA access to its trust account.

d) Agencies may always opt-out of a single individual weekly draft from IATA should it contain erroneous billing data or contested ADMs. In such a case, the agency would have to advise their bank of the draft dispute, but still pay the uncontested weekly settlement value. IATA has accepted payment in such cases by allowing agencies to make a deposit to a local branch of IATA's processing bank and in IATA's favour with a value date of the date the settlement is due. ARTA Canada members which need assistance with an individual opt-out automated settlement are welcome to contact ARTA Canada for guidance.

Agencies should consult their provincial regulator or legal counsel before signing the new IATA PAD Agreement.