Implementation of CASS is a contentious topic discussed in airline circles: IATA has been having on going discussions in Sri Lanka with the national carrier Sri Lankan Airlines, as well as other on-line carriers on implementation of the Cargo Accounts Settlement System (CASS) in the country.
IATA has also been in close dialogue with the Sri Lanka Freight Forwarders Association (SLFFA) with regard to the proposed implementation. CASS is a system designed for billing and settling of accounts and for credit management between airlines and freight forwarders. Interestingly, the way the implementation is viewed by the main stake holders has made it a highly contentious subject.
Most carriers are questioning the viability of implementing CASS in the current trading environment in Sri Lanka and also questioning whether they would in fact have any benefit by the proposed implementation. Sri Lanka is a market in which airlines operate through GSA’s and the total financial risk is cushioned by the GSA’s.
In such an environment where the credit risk is zero for airlines a stringent credit management system like CASS would be more of a liability than an asset. Some airlines see the registration fee and the transaction cost involved as an unnecessary burden. They also see other indirect costs attached in channelling financial transactions through CASS.
More importantly, airlines and GSA’s are sceptical about the system working, because of the various commercial agreements and understanding airlines have with individualfreight forwarders. However, few airlinesstill believe that the system would bringgreater control.
On the other side of the coin, the freight forwarders have a different perspective on the implementation of CASS. They are of the view that CASS in the current trading environment would create double standards and hence would be detrimental to the freight forwarding community.
Unlike in most regional countries, the airlines in Sri Lanka are in the practice of trading with exporters directly; a practice that the freight forwarders clearly do not favour. Freight forwarders fear that CASS combined with this practice would create an unequal playing field, disadvantageous to the freight forwarding community. To avoid this situation the freight forwarders are insistent on airlines stopping the practice of transacting with exporters directly if CASS is to be implemented.
Freight forwarders have stressed to IATA the importance of stopping this practice and that having cargo channeled to airlinesthrough accredited freight forwarders (air cargo agents), will help IATA to enhancethe industry standard in Sri Lanka. SLFFAis also firmly of the view that in Sri Lanka,for greater transparency, CASS should comeunder IATA resolution 815 as in the case ofIndia where a “joint council” would managethe programme.
During recent discussions SLFFA has requested IATA to enforce greater discipline in the industry as far as the airline members are concerned. The forwarding association also stressed that IATA, using their infrastructure and expertise, must create the right platform to enhance industry standards before a very stringent payment system like CASS is introduced.
SLFFA members have had a very close and cordial relationship with IATA, and have clearly and frankly expressed their concerns regarding the implementation of CASS. This dialogue is being continued, but there is no specific time frame agreed upon for implementation as the procedure suggested by IATA has thus far not been accepted by SLFFA. Contributed by the Sri Lanka Freight Forwarders Association (SLFFA).
