Festive Season scamming: R7m Durban travel agency fraud appears to be 'intentional bust-out'

2017-12-13 11:30 - Selene Brophy
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Cape Town - The recent suspension by The International Air Transport Association, IATA of Durban travel agency Flight Junction appears to be a classic case of an ' intentional bust-out'. This is according to Otto de Vries, CEO Association of the Southern African Travel Agents (ASATA) who has cautioned consumers to be especially careful when booking and planning their holidays.  

eTNW reports that an estimated R7-million in ticketed revenue has potentially been lost to airlines after Durban-based agency, Flight Junction allegedly issued cash tickets well beyond its IATA guarantee

The matter was picked up by airlines when they noticed a massive spike in cash ticket sales over one week in November.

SEE: IATA warns of credit card data deadline for air ticket travel agents 

'Behaviour of a bona fide travel agent' 

“Not only are Flight Junction not an ASATA member, this is certainly not the usual behaviour of a bona fide travel agent. Remember that 99.79% of accredited travel agents settle all their payments with their airline partners on time.

“If you consider that a tiny percentage of the $219bn processed through IATA’s BSP in 2016 were uncollected funds, it is clear that the travel agent remains a low-risk, loyal, committed channel for airlines. It is therefore unfortunate that cases like Flight Junction are publicised so extensively to put the legitimate travel industry into disrepute without providing the context that this is the exception, not the rule.”

'Intention of fraud' 

Otto explains that in the event of a bust-out, the modus operandi is for someone to buy an entity that has a low-bank guarantee with IATA. They wait for a weekend or off-peak period to issue large volumes of tickets with the intention of fraud. The perpetrators are also generally not bona-fide travel agents.

“We would caution consumers yet again to ensure that they are booking their travel through a member of ASATA, which represents bona fide, accredited travel companies that are bound by a Constitution, Code of Conduct and Charter. ASATA members follow sustainable business practices, comply with the laws of the land and are committed to ensuring customers travel with peace of mind,” says Otto.

SEE: Think your Bali festive season plans are dashed? Here's what you need to know

Why travel insurance matters

Travel insurance is essential to safeguard yourself against any loss both in the pre- and in-destination phases of your trip.

If your international holiday is cancelled as a result of bankruptcy of the airline, hotel, ferry, Train Operator, Coach Operator, Car Hire or event you booked, your travel insurance should cover any losses.

It’s crucial that you do your homework though because your insurance will not cover you if there was a public warning 14 days before the purchase of your policy that the airline, hotel or other travel supplier would go out of business.

Unfortunately, travel agents, tour organisers, or booking agents might not be covered by your travel insurance. You should also know that if the airline or hotel forms part of a package tour booked, there might be no cover. So make sure you read the fine print ahead of time so you know what is covered and what not.

Members of ASATA comply with a code of conduct, constitution and charter which is aimed at safeguarding the interests of the travelling public. 

Always keep in mind, if you find a deal that sounds simply too good to be true, it more than likely is.

What to share your travel experiences with us - email info@Traveller24.com,

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This holiday fraud prank is all the festive-season paranoia you don't need!