This was announced through a letter from the International Air Transport Association (IATA) which did not state the reasons as to why it had suspended the low cost carrier.
The letter denotes the airline breached its Billing and Settlement Plan (BSP) rules under Resolution 850 and has ordered all travel agents to cease issuing tickets and receiving payments on behalf of Fly540.
“IATA has suspended Fly540 with immediate effect, in accordance with the provisions in Resolution 850 ‘Attachment F’. BSP travel agents must immediately suspend all ticketing activities on behalf of Fly540, including the use of automated systems for processing of refunds or other transactions on behalf of Fly540. BSP travel agents must immediately stop using Fly540’s name and numeric code as a ticketing airline,” the notice by IATA read.
IATA can order the suspension of an airline’s ticket sales when it owes payments via the BSP, when it ceases all scheduled passenger operations, or when it enters a bankruptcy process under Resolution 850.
With IATA having over 88 BSPs across the world covering various markets, the BSP is an electronic system operated by IATA that allows accredited travel agents to book tickets and manage the payments for airlines that have registered with the system.
The freeze on ticketing for Fly540 means that passengers will no longer be able to book for flights as usual, and that travellers who had already booked flights will have to wait until the travel agents collecting payments on behalf of Fly540 agree with the airline on how refunds can be settled.
To streamline financial settlement service between airlines and travel agents operating in the country, BSP Kenya in October 2019 migrated to the NewGen ISS (New Generation IATA Settlement Scheme).
IATA’s regulations under ‘Attachment F’ outline procedures to be followed by IATA when it suspends an airline from a BSP, reinstatement of an airline to and termination from a BSP.
While IATA has given the airline an opportunity to protest the suspension in writing, among conditions it has set for Fly540 reinstatement to the platform is that the airline will have to show that it has rectified the cause of its suspension.
The airline would also have to settle any debt owed to IATA, if any, before it is allowed back to the ticketing and billing system.
Including holiday destinations such as Diani and Zanzibar, Fly540 has a fleet of five airplanes and currently flies to multiple destinations in East Africa.