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ARC Updates Agent Reporting AgreementMay 7, 2012 By: George Dooley Travel Agent
With ASTA's support and input, ARC reports that the company’s Joint Advisory Board for the Agent Reporting Agreement (JAB-ARA) has endorsed significant updates to the Agent Reporting Agreement (ARA). ARC will publish the updated ARA in June when the ARC Board of Directors is expected to approve it. It will then become effective in January 2013.
Often the source of controversy, the ARA is the critical three-party contract between a travel agency, ARC and ARC participating airlines, which defines the requirements to receive and maintain ARC accreditation.
Initially written in the early 1980s, the agreement had become unwieldy and challenging to navigate, and more importantly, it was considerably out of step with all three parties’ current business needs, ARC said.
“The ARA is the foundation of the U.S. travel industry’s agency accreditation and settlement system,” said Mike Premo, ARC’s president and CEO. “Updating this agreement is a springboard enabling ARC to make meaningful improvements in relationships, systems, and processes for all stakeholders. This revised ARA wouldn’t have been possible without the collaborative efforts of our many valued industry customers.”
Beginning in 2011, ARC undertook an extensive customer outreach effort to modernize the agreement, consulting with a diverse group of travel agents, airlines, and the American Society of Travel Agents (ASTA) to better understand what each group needed from the ARA.
Paul Ruden, ASTA’s senior vice president of legal and industry affairs commented, “ARC was very open and willing to engage the industry, as well as to look at both the details and the bigger-picture questions.”
The proposed ARA includes a number of changes requested by both travel agents and airlines. For example, ARC found that agents required greater flexibility in the management and structure of their businesses. To address this need, the proposed ARA will allow an agency to move its location throughout the United States without having to change its assigned ARC number, as well as possess multiple ARC numbers at one physical location.
Another change reported in response to agents’ requests is the addition of a new agency office classification: Associate Branch Location. This new location type will allow agencies to add a branch office that is not fully owned by the home office.
Alexandre Chemla, founder and president of ALTOUR International, commented, “We are pleased at the consultative approach used by ARC in bringing together the airline and travel agency communities to create a mutually beneficial new agreement, which provides greater flexibility in meeting today’s industry needs.”
Airlines requested that ARC continue to improve risk management processes to reduce their exposure to monetary losses. The most noteworthy proposal in response to this concern is the change in the draft date from 10 days to 5 days after the close of the sales reporting period. This will reduce the airlines’ exposure to losses should an agency not have sufficient funds when ARC attempts to draft its account for monies due.
This change allows current Financial Instrument requirements to remain the same –highly desired by every agent interviewed. “This change is a benefit for many of ARC’s agents, as more than half receive a payment from ARC each week,” added Premo, “and with this proposal, they will get their money faster.
"We have modernized the ARA to benefit travel agents and airlines. As our industry continues to change, ARC must ensure the ARA evolves accordingly,” said Premo. ARC will publish the updated ARA in June when the ARC Board of Directors is expected to approve it. It will then become effective in January 2013.
ARC said it plans to conduct an extensive travel agency outreach program throughout the remainder of the year to educate the industry about the changes to the ARA. This will include resources on the ARC website, webinars, conference presentations and personal meetings with agents.