IATA’s regional office in Nairobi has appealed to the High Court seeking to squash orders by the Kenyan Competition Authority, which were aimed to stop IATA from compelling licensed travel agents from using the sole insurance company selected by IATA for payment safeguards. These safeguards met the criteria of the airlines in case of defaults.
Bank guarantees or insurance bonds are required by the airlines to ensure payment for tickets sold actually is remitted in full to them, and need to be effective in regard to an insurance company’s ability to meet obligations and the track record of settlements of claims. Understandably, IATA has been careful on that score.
There have been some spectacular defaults by travel agents in Kenya and Uganda in the past, and in some cases, the insurance companies were unwilling or unable to pay the sums required. This eventually prompted the airlines to set very tight criteria before approving an insurance company.
Some travel agents, apparently unhappy having to deal with the selected insurer IATA stipulated, filed complaints with the Kenyan Competition Authority, which, without giving IATA an opportunity to be heard, slapped an order on the international airline body to stop the practice. When IATA then attempted to use the regular appeals process, it was discovered that the appeals tribunal was not properly constituted and that no chair had been appointed, making it impossible to actually go down that route, leaving IATA no other choice but to go to the High Court.
A source close to the IATA office in Nairobi confirmed that the organization was still assessing other insurance companies, described as a lengthy process, as it was involving a wide range of criteria to be fulfilled before additional insurers could be given the green light to join the scheme.