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ASTA Details Discussions With ARCSeptember 20, 2007 By: Jennifer Merritt Travel Agent
Even with a rejection by the Fees and Charges Working Group on Tuesday, the Airlines Reporting Corp. is following procedure and sending its proposed agency fee increase for review by the Joint Advisory Board at its next scheduled meeting on October 18. Meanwhile, the American Society of Travel Agents is in the throes of putting together a task force to investigate alternatives to ARC's proposal should the fee, which ASTA deems unreasonably high, go through. ARC has stated that the fee increase would help maintain the organization's technology infrastructure and recent tech-related investments, as well as help increase the value of ARC and travel agents in the eyes of the airlines. However, ASTA's Paul Ruden, senior vice president of legal and industry affairs, maintains that such explanations are not good enough to warrant a tripled fee increase, especially when, according to Ruden, ARC plays coy with its financial figures.
"I would emphasize that with all of this we asked ARC to provide us with detailed financial information and to show us how they allocate their cost so we could understand," Ruden said in a media briefing held Wednesday. "They refused outright to give us anything. The only figure they gave us was that 50 million is the total cost of operating ARC for a year. We were never given anything on which to judge the arguments they were making and continue to take the position that 90/10 split is the only thing justified based on historic practice."
As such, ASTA is putting together a task force of roughly 10 to 12 people, who likely will be named next week, to investigate an alternate settlement mechanism, Ruden said. The organization also is holding a webinar for members Thursday at 1:30Eastern time to answer any questions agents may have about the issue. to answer any questions agents may have about the issue. Too, the member portion of ASTA's web site now houses a fee calculator, where agents can input the number of branches and the number of quarterly transactions they have to calculate what their annual fee would be should ARC's proposal go into effect.
On Wednesday, ARC released a statement stating that the purpose of the Fees and Charges Working Group, of which ASTA is a part of, "is to offer constructive feedback and suggestions for ARC to consider in the development of agency fees," noting that the group's work over the summer resulted in "significant" changes to the original proposal, including a reduced fee. Ruden refuted this, noting that the original proposed fee was $425—a $30 difference from the current figure of $395.
"They argued us to that we should think of [the fee] as an investment and our response was that if we were going to be seen as investors than we should have a seat at the ARC table. That was rejected out of hand," Ruden said.
In a statement, ARC said that 80 percent of its agencies pay no transaction fee as they continue to be below the transaction floor of 1,000 transactions per quarter. "For such ARC entities, the proposed annual fee of $395 would be the entire administrative fee paid," the organization argued. "They would see a cost increase of $250 annually or approximately $20 a month. ARC finds it challenging to accept that such an increase for a small agent is really that dramatic in their daily operations."
ARC's proposed fee would be administered per independent or home office location. Agencies also would incur $150 per branch and STP locations (currently $145) and a quarterly transaction fee of 2 cents per transaction (currently 1.7 cents). Visit [www.astanet.com] and [www.arccorp.com].