Press Release
Issued by The Air Charter Association.
November 28, 2012
Growing numbers of people booking private charter flights are seeking ways to keep their deposits safe until their flight takes off.
"Clients may be asked to pay a substantial deposit to secure a charter flight but there is little protection if one of the other parties – the broker, the agent or the aircraft operator – goes out of business before the flight takes place," says Dick Gilbert, Chairman of BACA (The Baltic Air Charter Association).
To help solve this problem, BACA launched an escrow facility last year to provide a secure deposit for funds being paid in advance by customers for air charters worldwide.
"We have noticed a significant increase in enquiries about escrow in the last six months or so," says Mr Gilbert. "It is not necessarily that more operators or agents are going bust, it's more about peace of mind."
The aircraft operator is also protected by the escrow account as it ensures that the cancellation fee will be paid if the client decides to pull out of the contract.
BACA is a non-profit making organisation dedicated to raising standards in the air charter industry and its members include brokers, business aircraft operators, airports, airlines, handling agents and aviation lawyers and consultants.
"The escrow account allows BACA brokers to offer their clients safeguarded advance payments for charter flights or programmes, and also for charter operators to have total reassurance that deposits made on their behalf are secure, even in the event of cancellation prior to flight date," explains Mr Gilbert.
The facility, set up under associate company BACA Escrow Services Limited, acts as a safe, independent depository for funds paid in advance of a flight, provided that both parties agree to its use in each case.
"Each transaction is individual, customised to the requirements of that particular operation," he says. "And the actual process of moving funds in and out of the relevant accounts is administered by an independent accountant, so there is no risk to confidentiality. Using escrow for charters has been commonplace in the USA for years, but it is just starting to be appreciated now in Europe."
BACA set up the service in response to requests from members seeking to protect both themselves and their clients from the potential financial difficulties that may arise when an aircraft operator is unable to provide the service for which it has already been paid, partly or wholly.
"In the UK, the CAA and ABTA provide protection for buyers of air tickets or package holidays, but nobody protects the buyer of an air charter. That is the gap we aim to fill.
"There are alternatives, such as a broker setting up an escrow account with a lawyer on a trip by trip basis, or taking out insolvency insurance, but these can be expensive and insurance can vary hugely from case to case, or even be refused," Mr Gilbert says.
"Our service is run for members and not as a source of revenue. It has a predictable cost, which is lower than most comparable options, and which remains the same irrespective of the operator used or the level of risk."
