SHC restrains IATA from taking any coercive action against travel agencies

The Sindh High Court (SHC) has restrained the International Air Transport Association (IATA) from taking any coercive action against travel agencies including encashment of their guarantees by suspending the payment of cancelled tickets in present conditions caused by Covid-19.

An SHC bench, headed by Justice Muhammad Junaid Ghaffar, issued these orders in a suit filed by the Travel Agents Association of Pakistan (TAPP) and others against IATA and others.

According to a written order, Haider Waheed, the counsel for the plaintiffs, requested for passing of an ad-interim order and submitted that some of the plaintiffs were able to gain partial relief from the defendants; however, still some of the plaintiffs are being compelled to make entire payment of the tickets issued and cancelled due to the pandemic (COVID-19) by the airlines and for travel restrictions imposed the world over for the billing cycle starting from 1.3.2020 to 15.3.2020; 16.3.2020 to 31.3.2020 and 1.4.2020 to 15.4.2020.

He said that plaintiffs are being asked to even pay for the cancelled tickets though with an assurance that subsequently when refunds are sanctioned by the airlines, a set-off would be offered to them.

According to him, the Global Distribution System (GDS) of the airlines has been temporarily suspended; and the refunds are not being processed on timely basis, resultantly, asking the plaintiffs to first make payments of representing the airlines is unwarranted in the given facts and circumstances of the case, and, therefore, they may be restrained from taking any coercive action against the plaintiffs.

On the other hand, counsel for IATA argued that the GDS system is not under the control of his clients and they are acting according to the terms of the contract strictly and therefore, are unable to process the refunds claim immediately and offer adjustment/set off as requested. According to the counsel, they are bound by the contract terms which provide the mechanism of refunds and the processing time.

The court observed that conduct of IATA and airlines cannot be appreciated as they are even asking travel agents to make payment of the cancelled tickets and thereafter seek adjustment/set-off.

The court observed that though they have extended the time period of the billing cycle as submitted, yet at the same time, they have not acceded to this request of the plaintiffs, which otherwise seems to be justifiable as of today.

The court stated that this does not appear to be in line with the present situation prevailing in this country and the entire world.

The court ordered that travel agents shall make payment of the three billing cycles on the basis of the utilized tickets and shall not be asked to make payment of the cancelled tickets for which they have applied are entitled for an adjustment and or refund.

The court also restrained IATA from taking any coercive action including encashment of the guarantees furnished by the travel agents.