LONDON: The High Court in London has decided that Association of Pakistan Travel Agents’ claim against Pakistan International Airlines (PIA) regarding payment of commission on fuel surcharge is valid and payable.
Sitting at the Queen’s Bench Division in the Royal Courts of Justice here, the Judge decided that the YQ fare – fuel surcharge which is also shown on the tickets as “YQ” – is not a government tax, therefore travel agents are entitled to the payment of agreed commission on the amounts of this component.
The APTA-UK, which has 32 members, estimates that the final amount of the claimable commission - 2% and 9% fuel surcharge now owed to the travel agents - in respect of this Judgment would reach in access of about £15 Millions. The Judge ordered PIA to pay full costs to the claimants which stand at around £250,000 but he ordered PIA to pay £35,000 within 21 days to the claimants on account of their costs.
PIA has hired a top law firm which has offices around the world and their costs could be double of the claimants. In a further setback for PIA, the Learned Judge refused PIA’s application to appeal against his decision stating that they had no prospect of success in this case even if he had granted permission to appeal.
The decision of the High Court of Justice is considered to be a landmark in the history of aviation in it’s’ nature. It will set a precedent for travel agents all over the world to claim commissions on the YQ component of tickets against their respective airlines where appropriate. Based upon this Judgment, especially travel agents all over the UK and Europe would now be able to make a similar claim if their airlines have not paid commission on the fuel surcharge element of tickets.
Riaz Hussain Syed, the APTA-UK president, and Mohammad Anwar Malik, a senior Executive and Mahboob Ahmed, also a Senior Executive, who are also claimants against PIA said, “We never wanted to drag our national airline to the courts but it became necessary as PIA totally stopped payment of all commissions from 2010. We had to sustain our businesses without any commission and PIA did so to punish us for the action we therefore brought these proceedings because of the broken promises. We made several generous offers to the PIA to amicably settle the dispute but PIA was adamant and refused to hold any fruitful negotiations. “We will pursue our case against PIA for the rest of our claim; but also continue to support PIA ticket sales in order to save our national airline” they said.
The back ground to the dispute is that in around 1974, APTA was established as a private association with the support of PIA in the spirit of introducing PIA as an international airliner to the Pakistani community in the United Kingdom. In return of services of APTA, it was orally agreed that the PIA would pay a customary commission of 9% on all its ticket sales. It was further agreed - also orally - that the PIA would pay a further commission of 2% over and above any other commission(s) and incentives as an Over Riding Commission (ORC) to all those APTA members who would secure PIA ticket sales to the value of £250,000 or more per annum. These agreements were for an indefinite period. It was also agreed that APTA members will only promote PIA and each agent’s yearly sales must not be less than £250,000 per annum. As the business increased phenomenally, in 1998 PIA set the minimum benchmark at half a million pounds to qualify for the 2% ORC that the agents accepted. The PIA said there is no written agreement between the two but for the British courts it is sufficient to see that the two parties were engaged in business with each other for a minimum of three months.
It was around May 2006 that the PIA introduced an additional charge upon all its tickets, under the title of “YQ”; also known as “fuel charge” as “a government tax” therefore “non-commissionable”.
APTA members protested and required PIA to produce “written evidence” as to the claimed status of “YQ” as a “governmental imposed tax” as alleged but the PIA responded that since the PIA was owned by the government of Pakistan no one at the PIA had any personal financial interests as to “mislead” the APTA-UK members.
It was in May 2010, when the Australian Federal Court (AFC), in the matter of” Leonie’s Travel (PVT) Limited -v- Qantas Airways And Others (including British Airways) decided that the “YQ” fare (Fuel Surcharge) was a part of the price of airline ticket therefore the agents “are entitled to receive commission” in respect of the same on the agreed terms of commissions. Accordingly, Qantas Airways and others were required to pay £64million to the travel agents.
APTA-UK has another claim against PIA for payment of commissions in respect of sale of it’s’ tickets from October 2010 onwards which is up for hearing in February next year. The News tried to get response of the PIA about the court decision but several people in key positions in the UK and Pakistan when approached refused to comment.