The organisation has been campaigning for years to end the practice whereby airlines ask the GSAs to provide a guarantee for two or three months of revenue, to guard against the GSA going out of business and leaving the carrier out of pocket.
In Europe it managed in 2006 to get agreement that GSAs who joined the CASS system should not have to put up bank guarantees, and early last year IATA agreed in principle to extend that to all CASS systems worldwide.
But Glenn Shires, general secretary of FAGSA, says the practice is still not widely accepted in the Middle East and Asia. The association’s strategy has thus been to support new CASS systems being set up in various Asian countries, and to point out that GSAs can be an important step to giving them critical mass. “Now that CASS has opened up to GSAs, our members pump US$0.5 billion of business through CASS systems worldwide,” he points out.
Despite GSAs joining CASS, Shires said some carriers, especially in the Middle East, still insist on bank guarantees from them. “They are taking a belt and braces approach – insisting GSAs settle through CASS and still asking for bank guarantees, which is not fair,” he says.
Eleven new CASS operations were launched in 2007 according to IATA, which says they have reduced settlement costs by 47 per cent since 2003. In the next twelve months it plans to roll out CASS for exports in India, Taiwan, and Israel, and for imports in Australia and Singapore, while China will get a CASS settlement systems for domestic traffic.
Surcharges still burning issue
On FAGSA’s other longstanding campaign issue – the payment of commission to GSAs on fuel and security surcharges, which are in some cases no bigger than the freight rate, but which have to be collected by GSAs for free – there seems to have been little progress in the past year. The association’s position continues to be that it is all ready to take airlines to court on the issue, but that it doesn’t wish to have to take this drastic step.
Shires says evidence has been gathered for cases in Italy, the UK and the US, with the latter being the biggest stick it is waving at the airlines. “If we launch a case in the US, then under their class action laws anyone else with a remotely similar claim will be able to jump onto the bandwagon,” he warns.
But he says that given the downturn in the industry and the plethora of anti-trust investigations and lawsuits on the surcharge issue, FAGSA is reluctant to add further to airline woes: “Instead we are writing to airlines to ask for compensation for our members. It doesn’t have to be huge, but it has to be something.”
Resolution 871
FAGSA has also been campaigning for IATA Resolution 871 to be changed to put fuel surcharges in the rates box rather than the taxes box on the air waybill. If such a change was made, it argues, GSAs would then be in a better position to negotiate on the issue with individual carriers.
But progress on this has been patchy. “Resolution 871 has still not been fully changed,” Shires says. “Airlines don’t want it and many won’t even talk about it because of the US and EU anti-trust investigations. They have run into their offices and closed their doors.”
He sees this as a continuation of the behaviour which has got airlines into trouble with the US and EU authorities over cargo surcharges in the first place.“We warned them three or four years ago that if they did not change their behaviour they would be visited by the EU and US authorities, and they did not listen. Now we have some very sad chapters in the story being written.
“At FAGSA we do not want to be the cause of any more trouble to airlines. But there has to be some honour in this industry. We are calling on airlines to clear up this mess before the lawyers have a field day, which will not be good for any of us.”