The FTC “Correct” the airline’s unilateral zero-com

Fair Trade Commission decides ‘violation of IATA Terms and Conditions Act’ in KATA review request
Recommendation to correct unfair terms and conditions such as unilateral fee determination clause

A view of the ‘air ticket distribution system improvement public hearing’ held by KATA in October 2017 to legally prove the unfairness of the IATA regulations prior to the Fair Trade Commission review request. / Travel newspaper CB

The Fair Trade Commission ruled in favor of the travel industry that it would violate the Terms and Conditions Act for an airline to unilaterally determine the ticket sales commission to be paid to a travel agency. This is the result achieved three years after the official request for review in October 2018.

The Fair Trade Commission announced on the 20th, “It has reviewed IATA’s passenger sales agency contract and recommended that some unfair terms and conditions be corrected.” provisions, etc.,” he explained. He added, “If IATA corrects unfair terms and conditions in accordance with the recommendation of the Fair Trade Commission, damage to travel agencies due to unilateral decision on fees is expected to be prevented.”

This recommendation for correction by the Fair Trade Commission is in accordance with a request for review filed by the Korea Travel Association (KATA) in October 2018, claiming that IATA’s Passenger Sales Agency Agreement (PSAA) violates the Terms and Conditions Act. The key point was that airlines unilaterally abolished (zero-com) ticket sales fees for travel agencies based on unfair regulations. The Fair Trade Commission said, “There was a report from KATA that a number of airlines abolished the ticketing agency fees of travel agencies, resulting in a crisis in the entire travel industry, based on the provisions of unfair fee determination in the passenger sales agency contract signed by IATA with travel agencies. The Fair Trade Commission judged that the reported terms and conditions violated the ‘Act on the Regulation of Terms and Conditions’ after consulting the Terms and Conditions Review Advisory Committee, and recommended correction to the IATA.”

9.2.1.(a) of the travel agency handbook ‘Resolution 812’ attached to IATA’s passenger sales agency contract stipulates that BSP airlines can unilaterally determine all fees and other remuneration, which are important details in the contract between the travel agency and the airline. . In response, the Fair Trade Commission said, “Payment of fees and other remuneration will be said to be the benefit that is the object of the debt borne by the airline in the agency contract, and the content of the benefit will be decided by consultation between the two parties. The above provision, which grants the right to a business operator to make a unilateral decision, violates the Terms and Conditions Act.”

If IATA corrects the unfair terms and conditions as recommended by the Fair Trade Commission, airlines will not be able to determine the sales commission paid to travel agencies unilaterally in the future. The Fair Trade Commission predicts that if the opinions of travel agencies are reflected in the decision on fees, the rights to fees of travel agencies currently suffering from COVID-19 will be protected.

The Fair Trade Commission plans to complete the negotiation with IATA for correction of the relevant terms and conditions within 60 days after the correction is recommended. If the recommendation for correction is not followed without a justifiable reason, the correction order will be reviewed.

According to this decision, the travel industry, centered on KATA, will monitor the progress of IATA’s corrective recommendations, such as how to respond to the past losses caused by Zerocom, and the relationship between airlines and travel agencies regarding future ticket sales commission decisions. It is anticipated that follow-up measures will be established and deployed.

Meanwhile, in addition to the provisions related to unilateral fee determination, ▲ the clause stipulating that amendments to the contract have the same effect as the ones signed by the travel agency, ▲ frequently amended rules, etc. are considered to be included in the agency contract and agree to comply with them The FTC decided that the provisions stipulated by the travel agency also violated the Terms and Conditions Act.

By Kim Seon-joo, staff reporter [email protected]

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