DIP is launched in Pakistan in collaboration with IATA & United Insurance Company Pakistan Limited

The international Air Transport Association (IATA) Financial Se curi t i es (IFS)/De fau l t Insurance Program (DIP) has been successfully applied by IATA in Pakistan with effect from 1st October 2017. In collaboration with IATA & United Insurance Company Pakistan Limited, IATA air cargo agents enrolled into the program under the banner of ACAAP.


The international Air Transport
Association (IATA) Financial
Securities (IFS)/Default
Insurance Program (DIP) has been
successfully applied by IATA in Pakistan
with effect from 1st October 2017.

In collaboration with IATA & United
Insurance Company Pakistan Limited,
IATA air cargo agents enrolled into the
program under the banner of ACAAP.

Th e DIP is a cost-effective alternative
to expensive financial guarantees,
with low premiums that meet the
IATA requirements.

Over the past two decades, especially
post 9/11, the aviation industry
developed “extra vigilant systems,”
that also came at a cost. Agents were
forced to provide extra bank or cash
guarantees to individual airlines, to
provide additional financial security,
expected on a yearly basis and not
inclusive of the yearly IATA guarantees
agents were already subject to.

 

ACAAP members have faced
tremendous pressure to keep up, as
many of them were forced to provide
additional IFS. These heavy burdens,
mainly due to the increasingly stringent
rules, regulations and costs imposed
by the State Bank of Pakistan, have
resulted in:
Heavy bank charges, processing and
legal fees; Increased cash margin (up to
30 per cent in some cases); High-valued
collateral (150 per cent in many cases)
ACAAP members with IATA CASS
sales of $150 million or less per annum,
were also asked to pay insurance bonds
or bank guarantee charges.

The weakened Pakistan Rupee
(PKR) value, coupled with increasing
high risks and vulnerability for the
airlines have had a negative impact
on the airlines operating in Pakistan.

Interestingly, the tonnage capacity
and uplift figures have not increased
proportionately to that of the rates, due to the gradual weakening of
the PKR.

Th e rates hike, due to weak PKR,
has created huge receivables from
customers, but also led to financial
complications for the logistics sector,
especially IATA agents owing to high
financial turnovers.

Taking all of the above into
consideration, the successful
implementation of the DIP by the
ACAAP management is hoped to benefit
all the key players: IATA agents, airlines
and IATA.

About ACAAP

Air Cargo Agents Association of
Pakistan (ACAAP) is an Association
of International Air Transport
Association (IATA) approved agents.

The association was formed and
Registered with the Ministry of
Commerce Government of Pakistan
on October 20th, 1993.