According to sources, travel agents said to have signed up for a sales agency with the International Air Transport Association (IATA) which they were to sell air tickets on behalf of, failed to remit air ticket sales, attributing it to mass defaults.
IATA, already insured against such defaults, lodged a claim from Saham Assurance Kenya (now Mercantile) and soon after getting the reimbursement, the global aviation body then launched a probe which revealed that some of the agents may have pocketed the cash instead of remitting it to IATA, according to sources familiar with the matter.
Mercantile Insurance requested the court to seize money belonging to the suspects’ (travel agents) within seven days.
In a court ruling by High Court Judge David Majanja, Dyer and Blair Investment Bank was ordered to sell shares belonging to the travel agents in a Sh1 billion ($9.1 million) air ticket fraud after which the proceeds be transferred to Mercantile Insurance Company which is said to have lost Sh1 billion through the scam.
“That Dyer and Blair Investment Bank be and is hereby directed to sell the aforesaid shares and thereafter transfer the amount realised to the second decree holder (Mercantile Insurance Company),” said Justice Majanja in a judgment delivered on July 30, 2021.
IATA has since revoked the licences of about 20 air ticketing agents while Mercantile settled with some of the ticketing agents out of court even as it brought charges against others.
Ticketing agents are expected to remit some cash for every ticket purchased from them to IATA to forward to respective airlines.
Initially, air-ticketing agents were given up to 30 days to remit their money to the airlines’ body, making it possible for travellers to book their air-ticket on credit.
But following massive defaults by the agents, IATA in 2016 made some changes in its payment cycles, requiring air-ticketing agents to remit their money in 15 days, according to a notice issued by the Kenya Association of Travel Agents at that time.
The agents have also been accused of playing a part in Kenya Airways’ huge losses by overcharging the airline’s corporate clients, making its tickets non-competitive.
A report by audit firm Deloitte Kenya gave an example in which in 2014 and 2015, travel agents overcharged corporate clients by $312,650 (Sh31.3 million).
By Victor Shalton Odhiambo