Glossary of Terms

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P Q | R | S | T | U | V | W X | Y Z

 

A

 

 

 

Air Travel Card

An air travel card is a commercial agreement between different commercial bodies that is based on special terms of credit, which are different than the credit terms offered to individual persons in the market. The financial reconciliation is conducted directly between airline and the commercial body. The travel agency receives a commission from the airline.

B

B2B

Bank Settlement Plan (BSP)

An electronic billing system supervised by IATA designed to facilitate the flow of data and funds between travel agencies and airlines. The advantage of the BSP is that it consolidates all information through a single system, rather than each travel agency having an individual relationship with each airline. The BSPs are organized on a local basis, usually one per country. Travel agents are required to be accredited with a BSP (or an Airline reporting corporation in the U.S.) to issue airline reservations through a GDS.

C

Commission

  1. A fixed amount or percentage (based on the supplier  price) paid to the company by the supplier as incentive for selling its products. The commission amount or percentage is defined in an agreement reached between the company and the supplier.

  2. A fixed amount or percentage (based on the selling price) paid to the travel agent by the company as incentive for selling its products. The commission amount or percentage is defined in an agreement reached between the company and the travel agent.

Commission includes VAT

An income type in which the commission earned (profit) also includes the VAT component. The commission is deducted from the remittance to the supplier.

The profit is credited to the Commission includes VAT account with a TXI document.

The VAT amount is credited to the VAT - Output account with a TXI document. This amount will be remitted to the tax authorities.

Example of term:

For Example:

A product is purchased from a supplier for $200 (selling price). According to the agreement with the supplier, the company is entitled to a 10% commission after selling the product.

The product is sold to a customer for $200.

As the commission is $20 and the VAT percentage (in this example) is 16.5%, the amount of $20 is divided into a commission component of $17.17 and a VAT component of $2.83.

The remittance to the supplier will be calculated as follows: $200 - $20 (commission + VAT) = $180.00

$17.17 is credited to the Commission includes VAT account with a TXI document.

$2.83 is credited to the VAT - Output account with a TXI document.

Commission plus VAT

An income type in which both the commission earned (profit) and the VAT applied to the commission are deducted from the remittance to the supplier. The VAT that is paid to the tax authorities is deducted entirely from the amount due the supplier.

The profit is credited to the Commission plus VAT account with a TXI document.

The VAT amount is credited to the VAT - Output account with a TXI document. This amount will be remitted to the tax authorities.

For Example:

A product is purchased from a supplier for $200 (selling price). According to the agreement with the supplier, the company is entitled to a 10% commission after selling the product.

The product is sold to a customer for $200.

As the profit is $20 and the VAT percentage (in this example) is 16.5%, the VAT on the profit is $3.30.

The remittance to the supplier will be calculated as follows: $200 - $20 (commission) - $3.30 (VAT) = $176.70

$20 is credited to the Commission plus VAT account with a TXI document.

$3.30 is credited to the VAT - Output account with a TXI document.

Commission VAT exempt

See: Commission VAT zero

Commission VAT zero

An income type in which zero VAT is applied to the commission profit.

The entire profit is credited to the Commission VAT zero account with a TXI document.

For Example:

A product is purchased from a supplier for $200 (selling price). According to the agreement with the supplier, the company is entitled to a 10% commission after selling the product.

The product is sold to a customer for $200.

The commission from this sale is $20 and represents the profit earned.

The remittance to the supplier will be calculated as follows: $200 - $20 (commission) = $180.00

$20 is credited to the Commission VAT zero account with a TXI document.

D

E

ENS

F

 

G

General Sales Agent (GSA)

An agency that is established to represent a foreign airline that does not exist in nor fly directly to a specific country.

H

Hub

In a self-operated flight, the hub indicates the city in which the flight originates.

I

International Air Transport Association (IATA)

The international air transport association is an international industry trade group that manages the airline industry around the world. IATA is in charge of setting all the airline rules and regulations, and is responsible for providing licenses to airlines and travel agencies. IATA is the arbitrator in all financial disputes between airlines and travel agencies.

Income Account

An account to which revenue, from markup or commission, is added. The tax invoice document (TXI) reflects the profit (revenue) earned.

Income Type

The manner by which income is earned in regards to products purchased from a supplier. The income type is defined in the supplier account. Income types are distinguished by the type of income earned (markup or commission) and by how VAT is handled.

See specific income type:

Issue Date

The date on which a financial document (e.g. voucher) is produced.

 

J

 

K

 

L

 

M

Market

Markup

A fixed amount or percentage added to the supplier price in order to create a profit.

For Example:

A product is purchased from a supplier for €100 (supplier price). A fixed amount of €50 is added to this price.

The product is sold to a customer for €150.

The markup from this sale is €50 and represents the profit earned.

Markup includes VAT

An income type in which the markup profit also includes the VAT component.

The profit, after deduction of VAT, is credited to the Markup includes VAT account with a TXI document.

The VAT amount is credited to the VAT - Output account with a TXI document. This amount will be remitted to the tax authorities.

For Example:

A product is purchased from a supplier for €100 (supplier price). A fixed markup amount of €10 is added to this price.

The product is sold to a customer for €110.

The markup from this sale is €10 and represents the profit (including VAT) earned.

When VAT is 16.5%:

€8.58 is credited to the Markup includes VAT account with a TXI document.

€1.42 is credited to the VAT - Output account with a TXI document.

Markup VAT exempt

See: Markup VAT zero rate

Markup VAT zero rate

An income type in which zero VAT is applied to the markup profit.

The entire profit is credited to the Markup VAT Zero account with a TXI document.

For Example:

A product is purchased from a supplier for €100 (supplier price). A fixed markup amount of €10 is added to this price.

The product is sold to a customer for €110.

The markup from this sale is €10 and represents the profit earned.

€10 is credited to the Markup VAT Zero account with a TXI document.

Miscellaneous Charges Order (MCO)

A Miscellaneous Charges Order (MCO) is a document that financially binds a travel agency to purchase a product from the supplier providing the product, and pay the supplier for the product according to the terms that were agreed upon between the travel agency and the supplier.

N

Net-Gross Transaction

A travel file composed of one or more net transactions and only one gross transaction.

A voucher is issued to the supplier for each of the net transactions. The sum total of the vouchers will not equal the selling price of the transaction as the difference in prices represents the profit.

An invoice is issued to the travel agent or direct customer in the amount of the selling price.

A TXI document is issued for the profit earned in this transaction.

This transaction type is used for dynamic packages, static packages, and calculation sheets.

For Example:

A travel file includes the following net transactions:

1. Flight transaction - $500

2. Hotel transaction - $200

3. Transfer transaction - $50

Vouchers, in the amount of $750, are issued to the suppliers.

The three transactions are bundled in a dynamic package and sold at a selling price of $1000.

An invoice is issued in the amount of $1000.

A TXI document, in the amount of $250, is issued and credits the relevant income account.

When selling self operation tours, the net and gross transactions are in separate travel files:

  1. One travel file consolidates all the net transactions which comprise the components of the tour: hotel, activity, transfer, etc.

  2. For each passenger purchasing the self operation tour, a separate travel file is created (known also as a satellite travel file). This travel file, connected to the consolidated travel file mentioned above, includes only one gross transaction representing the sum total of net transactions and the markup added.

Net to Remit

O

P Q

Paying Supplier

The supplier paid for the service.

Passenger Name Record (PNR)

A passenger name record (PNR) is a record in the database of a computer reservation system that contains the itinerary for a passenger or group of passengers  travelling together. The PNR is comprised of letters and numbers, and contains information, such as:

R

S

Selling Price

The price at which a product is sold to a customer.

Service Provider

The supplier providing the actual service.

Standard Transaction

A transaction from within a travel file that includes a supplier price and a selling price.

A voucher is issued to the supplier in the amount of the supplier price.

An invoice is issued to the travel agent or direct customer in the amount of the selling price.

The currency of the net amount paid to the supplier (in the supplier reconciliation process) may differ from the currency in which the selling price amount is displayed to the customer.

Supplier Price

 

T

Transaction

See specific transaction type:

Net-Gross Transaction

Standard Transaction

U

V

W X

 

Y Z