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ASTA Victorious on Behalf of Travel Agents in ARC Case

July 17, 2008 By: George Dooley

American Society of Travel Agents (ASTA) claimed victory with the Independent Arbitration Panel (IAP) decision to grant ASTA’s appeal of the annual fee increase by the Airlines Reporting Corporation (ARC).

“Today’s ruling shows that David can bring down Goliath when you have right on your side,” said Cheryl Hudak, president and CEO of ASTA. “This is a tremendous victory, not just for ASTA but for travel agents across the country who now will not be subject to unconscionable annual fee increases that could have risen by as much as 500 percent in coming years.

“Many groups, including ASTA’s Corporate Advisory Council, were involved in this victory, but we would specifically like to thank Carlson Wagonlit Travel Network Associates and Uniglobe Travel USA LLC, and in particular Andrew Henry (Uniglobe), Don Kennedy (Carlson), Priscilla Alexander (Protravel International) and Allan Huntley (Abacus Travel) who served as agency witnesses in the appeal,” she said.

In its ruling, the IAP said that it "finds that ARC has not met its burden of proof to show that the new annual administrative fees adopted by ARC on December 6, 2007, represent a fair allocation of costs between carriers and agents. Therefore, ASTA’s appeal is granted. …. [ARC’s decision] on annual fees represents a shifting of ARC’s cost burden from the carriers to the travel agents without any proven benefit to either ARC or travel agents.”

ASTA said that although the IAP finding specifically applies to the 2008 fee increase, it went on to address the future years covered by ARC’s fee increase plan. It said that “absent new evidence,” the proposed fee structure does not appear to represent a fair allocation of costs “based on the value of other services that ARC provides and offers to the travel agents.” The most immediate result from this ruling is that the second installment on the annual fee that was to be collected by ARC later this month cannot be collected.

In a statement, ARC President and CEO David Collins said, “Naturally, we are respectful of the Panel’s authority, but at the same time, disappointed by their decision.  We sincerely believe that ARC and our accredited agencies must do all we can to make the travel agency channel more cost-competitive with other distribution options available to suppliers, and that this decision seriously hampers our ability to do so.  In light of the economic environment that airlines in particular face, this decision is even more impactful.”

As a result of the IAP decision, ARC will cancel the previously scheduled July 24, 2008 collection of additional fees under the proposed ARC plan. The panel’s decision will require ARC to recalculate the 2008 fee structure. ARC will announce the final 2008 fee structure once these calculations are made and make whatever adjustments are needed to refund or adjust agency collections accordingly.

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