|Lauri Reishus// (c) 2011 ARC|
The proliferation of airline ancillary charges looms as a major challenge – and opportunity - for travel agents and the travel industry, according to Lauri Reishus, vice president, operations for Airlines Reporting Corporation (ARC).
“ARC has taken a proactive role in developing its Electronic Miscellaneous Document (EMD) system which will prove invaluable to agents and the industry,” she told Travel Agent.
ARC reported its first travel agent EMD last week – a preferred seat on an American Airlines (AA) flight. “We will see many more EMD transactions and ARC has anticipated this with its EMD capabilities,” Reishus said. “EMD provides a client service capability vital to agents and to their clients,”
ARC reports it has been EMD ready since last year. EMD accommodates a variety of ancillary charges within a single transaction and links them to multiple legs of an airline ticket.
This in turn offers processing efficiency – for travel agents and corporate travel managers – allowing clients to book the ancillary services with the agent rather than directly with the carrier or at the airport.
“EMD is an important service option for agents and their clients,” Reishus says. “ We urge agents to stay abreast of developments with EMD offerings to better serve their clients.” Reishus says that a collective effort will have to be made to make the EMD system work, including the collaboration of agents, airlines, third-party software providers and global distribution system (GDS) providers.
Much as any transaction, EMD’s must be priced, agents must book, airlines must fulfill, and there has to be a useable reporting and settlement process. As reported, the first EMD transaction was for a preferred seat on an AA flight that was placed via AA’s direct connect technology provider, Farelogix. It was, ARC notes, the first sale of an air carrier’s ancillary product by a travel agency processed using an EMD.
EMD permits agency customers to pay for items such as extra baggage or premium seating at the time of the booking along with their tickets. This gives the agents clients the convenience of “one-stop” shopping and can enhance the value of the agent to the client.
(Whether commissionable or not would depend on the agency agreement with the carrier.)
There are two types of EMD’s: the EMD-S , (Stand Alone) and the EMD-A (Associated). The EMD-S can be used independent of an e-ticket for services such as ground transportation, deposits, and residual value. The EMD-A is linked to an e-ticket at the coupon level and ARC notes that multiple EMD-A's can exist per ticket or coupon.
As and when adopted by the air carriers and technology service providers, EMD will allow agencies and corporate travel managers to sell and service ancillary services as they come online with baggage fees and preferred seating fees - the first in the line for implementation. In time other types of fees could be added.
How important is EMD? Amadeus reported that in 2007, only 23 airlines worldwide disclosed ancillary revenue activity--a modest result of $2.45 billion. The world changed dramatically in four years, Amadeus notes, with 47 carriers disclosing 2010 ancillary revenue activity of $21.46 billion. Amadeus estimated this represents ancillary revenue growth of 38 percent over 2009 and 96 percent since 2008. When 2011 results the total could be even higher.
Reishus, a 16-year veteran of TQ3 Navigant prior to joining ARC in 2005, also reports that ARC will sustain its proactive response to ancillary fee proliferation with an extensive education and training program for agents, including webinars, on EMD.
In the words of Mike Premo, ARC’s president, “When ARC anticipated the sale of ancillary services products by travel agents a number of years ago, we triggered a rigorous process insuring our settlement technology would be prepared for this event.”
“We urge agents to familiarize themselves with EMD and its potential benefits to their operations,” Reishus said. “Ancillary services are here to stay.”