What Zuji’s Suspension for Missed Payments Means for Asia’s Online Travel Pioneers

Asian online travel agency Zuji has failed to meet its payment obligations for airline ticket sales and has been suspended by the International Air Transport Association (IATA) from selling tickets through a settlement program with participating airlines.

Zuji operates in Singapore and Hong Kong but its websites in both markets have been taken down, proclaiming, “New site coming soon.”

One of the earliest OTAs to open in Asia-Pacific, its fate is now uncertain. “Discussions are underway to reinstate Zuji’s participation in the IATA Billing & Settlement Plan (BSP) once repayment conditions are met,” IATA’s spokesperson Albert Tjoeng told Skift. The so-called BSP is a settlement system that facilitates and simplifies the selling, reporting, and remitting of funds between IATA-accredited travel agents and airlines participating in a particular plan.

It is unclear if Zuji is able to settle its outstanding dues to airlines within a specific time. There are also “a number of factors to consider before the agent can be reinstated,” Tjoeng said, but he wouldn’t elaborate further what these factors are when asked.

The amount that Zuji owes to airlines is undisclosed.

The Zuji website carries the ‘I’ll be back’ message. Will it?

At press time, Zuji’s CEO and managing director Jacob Liang, who is also commercial director of Uriel Aviation Holdings, Zuji’s parent company, declined to speak to Skift.

He referred questions to an official spokesperson, Jackson Hui, who said, Zuji does have an outstanding payment to IATA, but the company is in the process of making this payment, and expects it to be completed shortly.

“We expect to resume our service with our new website in Q1 2019.”

He declined to go beyond that, and it remains a puzzle why a new website, for example, is needed, or what Zuji’s strategy is next.

Even though Zuji could still sell tickets if it has bilateral agreements directly with airlines to sell their tickets, or purchase tickets through other IATA-accredited travel agencies, the suspension clouds its financial standing and could affect its future credit terms and trading conditions.

Another early Asian OTA, publicly listed Asiatravel.com Holdings, is at press time making a last-ditch attempt to stay in business. Its trading was suspended in July after its controlling shareholder missed a scheduled funding payment of $5.4 million.

Zuji was birthed in Singapore in the infancy days of Asia’s online travel in 2002 by a consortium of airlines and the now defunct Asia-Pacific distribution system Abacus, which was acquired fully by Sabre Holdings in 2015.

The OTA changed hands three times, first to Sabre’s Travelocity in 2006, which sold it to Australia’s Webjet in 2012 for $18 million in 2012, which in turn made a tidy sum by selling it four years later to Uriel for $40 million.

In its earlier years, it operated as Zuji in Singapore, Hong Kong, Taiwan and Australia, Nextour in India and Travelocity in New Zealand, but what remains is only the Hong Kong and Singapore operation. Webjet contracted with Uriel to run the Australian operations for a period that expired last year.

An issue could be that Uriel is an aviation company, unlike Webjet, which is a leading OTA in Australia that also has a B2B bed bank that provides synergies to the B2C business. Owned by undisclosed Hong Kong-based investors, with China’s HNA Group having a minority stake, the company has been placing a lot of focus on its major venture, HK Express Airways, Hong Kong-based low-cost carrier partly owned by HNA, and U-Fly Alliance, the world’s first LCC alliance.

The entry of OTAs, such as Expedia and Agoda with large marketing funds and deep expertise, is clearly biting Zuji.

Reaction to Zuji’s suspension on social media channels in Singapore shows consumer discontentment over areas such as service, uncompetitive pricing, and their ability to go direct to airlines or competing OTAs.

The Consumers Association of Singapore said it had received 26 complaints against the first since the start of the year, with the majority involving disputes over the confirmation and cancellation of travel bookings, according to a report in The Straits Times Singapore, which also said the company had cut staff in its Singapore office.