Practice Area

Travel Agency Setup

Kakakhel Law Associates | Travel Agency Setup - Pakistan

A travel agency is a private retailer or public service that provides travel and tourism-related services to the general public on behalf of accommodation or travel suppliers, offering various travel packages for different destinations.

Planning and booking trips online can often be overwhelming and disappointing. To ensure a smooth and enjoyable experience, it is advisable to engage a reputable travel agency that can handle the trip scheduling, bookings, and ticket arrangements.

In Pakistan, the trend of travel has been growing, leading to a greater interest among individuals to start their own travel agencies. A travel agency is typically a firm or company that makes the necessary arrangements for travelers.

Kakakhel Law Associates assists individuals in obtaining travel agency licenses in Pakistan from the relevant authorities, ensuring compliance with all legal and regulatory requirements.

Legal Compliance

The following laws and departments govern the licensing of travel agencies in Pakistan:

Relevant Laws

Travel Agencies Act, 1976

Travel Agencies Rules, 1977

Relevant Authorities

Federal: Department of Tourist Services

Punjab: Youth Affairs, Sports, Archaeology & Tourism Department (Government of Punjab)

The Travel Agencies Act 1976 defines “travel agency” as a person, by whatever name called, who:

The application will be submitted to the Chairman, HEC (five copies + one soft copy)

makes, directly or indirectly, on commercial basis arrangements for the passage of the tourists, or use of transport, or transportation of their baggage or goods by sea, air rail or road;
makes arrangements for lodging, transport or other services relating to travel of persons with in Pakistan or arranges entertainment, sightseeing, excursion and guide services, whether the arrangements are made on the basis of comprehensive all-inclusive rates or on the basis of separate charges for each service provided; or
has been delegated general authority in respect of sales for the airlines or other carriers, either directly or through a sub-contract.

The application will be submitted to the Chairman, HEC (five copies + one soft copy)

The Travel Agencies Act 1976, Section 6, makes it obligatory for every person to obtain a licence before acting as a Travel Agency and carrying out the above-mentioned services. Similarly, the section also restricts airlines and other carrier to delegate general authority in respect of sales, either directly or through a sub contract, to a person who does not hold a valid licence.

Fields of Operation for the Travel Agency

A Travel Agency may choose to work and obtain a license for one or more of the following fields of operation, namely:

booking of passages and baggage by air, rail road or sea for citizens of Pakistan or tourists for any destination;
organizing group tours of citizens of Pakistan or foreigners within Pakistan;
organizing or arranging sightseeing, providing of arranging sports including shooting (Shikar) entertainment or arranging trekking or mountain climbing for tourists within Pakistan; and
providing or arranging accommodation and transportation for tourists within Pakistan or outside Pakistan.

Federal - Travel Agency Licencing Process

Application Process

Submission on of application on prescribed form
Scrutiny of documents by DTS
Character verification
Inspection of premises by DTS
Issuance of demand note for registration / license fee and bank guarantee or defer application to fulfil requirements
Issuance of license

Required Documents

Bank Certificate showing a Capital of not less than Rs. 200,000.
A statement showing assets and liabilities duly certified by an appropriate authority.
An attested copy of registered National Tax Number.
Attested copies of lease / rent agreement / proof of the ownership of premises.
In case of Partnership Firm, attested copies of Registration Certificate and Partnership Deed duly certified by the Registrar of Firms.
In case of Limited Company, attested copies of Incorporation Certificate, Memorandum & Articles of Association, Form-A and Form-29 duly certified by the Registrar of Companies.
Office Plan indicating the space, various counters, show windows etc.
A list of staff showing designation of each person along with attested copies of their NICs, qualifications, training and experience certificates.
Attested copies of National Identity Card of the Proprietor / Partners / Directors / Chief Executive / Manager etc.

Punjab - Travel Agency Licencing Process

The application form is prescribed in the Travel Agencies Rules 1977 under Rule 3(1), according to which following documents are required with the licence application:

An investment statement showing assets and liabilities duly certified by an appropriate authority i.e., chartered accountant or income tax practitioner.
An attested copy of National Tax Number.
Attested copies of lease/rent agreement / proof of the ownership of the premises.
In case of Partnership Firm, attested copies of Registration Certificate and Partnership Deed duly attested.
In case of Limited Company, attested copies of Incorporation Certificate, Memorandum & Articles of Association, Form-A and Form-29 duly certified from Securities & Exchange Commission of Pakistan (SECP).
A sketch of the office showing various counters, windows etc. with measurement showing its covered area not less than 250 sq. ft.
A list of staff showing their designations, qualifications, training and experience in travel trade business along with attested copies of the supporting documents.
Attested copies of CNIC of the Proprietor / Partners / Directors / Chief Executive / Manager and employee.
Photocopy of registration of a vehicle of 800cc or above.

Fees

Only for air ticketing: Rs.8,000/- and Bank Guarantee Rs.200,000/- Ticketing + Group Tours + Transportation Accommodation Rs.20,000/- and Bank Guarantee Rs.400,000/- Domestic Tourism + Transportation Accommodation Rs.16,000/- and Bank Guarantee Rs.200,000/-

International Air Transport Association (IATA) Benefits

There are multiple benefits of being an IATA Accredited Agents are:

Access to approximately 250 IATA airline members using a single standard Sales Agency Agreement.
Authorisation to sell international and/or domestic tickets on behalf of the airlines.
Access to IATAs Billing and Settlement Plan (BSP), and BSPlink that together provide a single standard interface for invoicing and payment between the agent and multiple airlines and transport providers.
Global travel industry recognition through an IATA Numeric Code that provides a unique identifier for the agent.
Global consumer confidence due to IATA Travel Agents meeting industry standards identifiable by the IATA logo and branding displayed on Travel Agents premises and websites Provides standard procedures which ensure fair and uniform standards in all dealings with the airlines.

Procedure for becoming IATA Accredited Agent in Pakistan

General Rule

The applicant must have conducted travel agent business for at least twenty-four (24) months having a Government License issued by Department of Tourist Services [DTS], Ministry of Tourism, Government of Pakistan. If validity of DTS license is less than 24 months, then the applicant should furnish a Recognition Letter (RL) of having worked for at least twenty-four (24) months issued by the Ministry of Religious Affairs (MoRA).

Criteria for Evaluation of Agents' Accounts

All financial information used in the financial criteria will be extracted from the Agent’s Audited Accounts prepared by a chartered accountant.
There must be positive Net Equity [ST]
Adjusted Current Assets must exceed Current Liabilities [ST]
Operating result (i.e., Net result (profit/loss) before income tax, before exceptional result (profit / loss) and before financial charges (profit / loss)) must be positive [ST]
Net results must be positive [ST]
Decrease in net income [if any] (i.e., Current FY income / Previous FY income) must not be smaller than 0.75 for the short-term ratio [ST]
Decrease in net income [if any] (i.e., Current FY income / FY 2 years prior income) must not be smaller than 0.75for the long-term ratio [LT]
Cash Generated by operations (i.e., Profit before tax adjusted for non-cash charges/provisions and working capital changes) must be positive [LT]
Minimum paid-up Capital/Investment of PKR 5 million for Head Office and PKR 1 million for each Associate Entity.

Annual Financial Reviews

All Agents must provide Audited Accounts no later than 12 months after each financial year end, of that agent for the purposes of evaluation against the financial tests in Section 2.

Interim Financial Reviews

For any Financial Review conducted for cause at a time other than in respect of an Agent’s financial year end, IATA may conduct a Financial Review in accordance with section 3 as applicable to that Agent by reviewing the internal monthly management accounts of the Agent showing the results for each month since the last accounting date, the cumulative results to date and the latest balance sheet.

Financial Security

An Agent will not be accredited or will not continue to be accredited until any Financial Security required to be provided to IATA has been received by IATA and confirmed to IATA by way of written confirmation received directly from the third party supporting the Financial Security that the Financial Security was issued by that third party and is valid.
Financial Securities will be subject to a minimum notice period of ninety (90) days and be valid for a minimum of at least one year.
All Agents/ Applicants notwithstanding the Risk Status, must furnish a minimum Financial Security for an existing agent is PKR 7,000,000 or equivalent to the average BSP cash sales over last 12 months, for the number of Days Sales at Risk, whichever is higher.
For Agents accredited for less than 12 months, the minimum Financial Security / Bank Guarantee will be PKR 10 million.
At any point in time, if the existing Financial Security is insufficient to cover the Amount at Risk, the amount of the Financial Security required will be increased to cover the Amount at Risk.
All Agents / Applicants notwithstanding the Risk Status must at all times provide a Financial Security which will equal their assigned Remittance Holding Capacity. However, an Applicant/Agent may at any time request to reduce or increase the Financial Security amount provided in accordance with Resolution.