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Opinion: Do Agents Need ARC?

March 17, 2008 By: Travel Agent Central Contributor Travel Agent

The acrimonious debate over the Airline Reporting Corporation's fee hikes raises interesting questions about the past and future of ARC and travel agents' relationship to the airline industry. Of great interest will be the conclusions reached by ASTA's ongoing Task Force to study alternatives to ARC.

What if there were no ARC? Would the airlines or travel agents have to reinvent ARC? The truth is that ARC is well managed and plays a vital role in providing a neutral ticketing system. It's convenient and cost efficient. It's also tough to imagine each travel agency dealing one on one with the 170 airlines that now belong to ARC. The costs would be staggering, as would the endless disputes over debits and credits.

Additionally, a separate reporting and remitting process would have to be developed. Agency locations now using ARC's Travel Agent Service Fee Program and alternative merchant agreements would have to find an alternative. Would agents have to deal with multiple credit card companies? Plus ARC provides many optional services that travel agents use. This includes accreditation, fraud alerts, and tremendous storage and data retrieval resources. Much depends on the agency needs and volume of airline transactions.

But ARC's management is skillfully applying and has invested wisely in the technology needed to make the system work. Note the painless shift to ticketless systems. And we bet that eight out of 10 agents could not name more than five of ARC's dozen or more existing service capabilities. Too many agents continue to blame ARC for the 1995 airline commission cuts. Today, an estimated 55% of airline ticketing is done by agents and settled through ARC.

Do travel agents need ARC? Yes. So do the airlines. What should travel agents pay for ARC services? That is debatable depending on the needs of the individual agency and its volume. One wit close to ARC said the cost to agents is less than half the price of a Grande Latte at Starbucks. Could the airlines do it cheaper with direct online sales? Could ARC end up arguing that agents provide value?

A real-time question if ARC has the resources to sustain a high level of investment in technology, staff and systems to keep airlines and agents ahead of the curve. What's a fair increase in fees? We don't have an answer. But the bottom-line is clear: can carriers and agents deliver quality service to the traveling public at a reasonable cost...including transaction costs?

With or without commissions, travel agents will continue to sell a high volume of domestic and international airline tickets and that means year over year, a higher volume of transactions. Will ARC's efficiencies and economies of scale be even more important to agents in the future?

Both ARC and ASTA have strong, skilled managements and leadership and constituencies that offer tough, well argued viewpoints. It will be a test of both ASTA and ARC to find a common ground that has integrity. One starting point might be greater transparency from ARC on costs and generating more data useful to agents - including service fees data.(GD)

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