Led by ASTA, a unified travel agency industry won a significant, too-rare victory over the Airlines Reporting Corporation (ARC). After months of argument and testimony, the Independent Arbitration Panel (IAP) unanimously decided on July 17 that hefty administrative fees imposed by ARC were not a fair allocation of costs.
The IAP ruling is simple. The IAP said ARC has not met its burden of proof to show that its annual administrative fees were a fair allocation of costs between carriers and agents. They granted ASTA’s appeal and said a shifting of ARC’s cost burden from the air carriers who own ARC to agents are without any proven benefit, either for ARC or for agents. The IAP is empowered by law to resolve disputes.
The surprise pro-agent decision was welcomed, especially by ASTA, which calculated that ARC’s fees could increase by as much as 172 percent this year and jump to more than 500 percent in 2011. The impact on agency costs was obvious, as was the strength of agency opposition to ARC’s policy.
For once, the travel agency David had beaten back the airlines’ Goliath, as ASTA president and CEO Cheryl Hudak suggested. Not only had ASTA won, but so too had travel agents whose voices had been heard and heeded by the IAP.
ASTA’s claims of a victory are justified. But it is a shared victory and ASTA did itself proud by letting the industry know the extensive contributions of agents and consortia that helped battle ARC. Two major franchise groups—Carlson (now The Travel Franchise Group) and Uniglobe Travel—earned special recognition for their leadership.
Uniglobe and Carlson both contributed mightily, working with ASTA via its Corporate Advisory Council (CAC) and as ASTA’s co-appellants. ASTA also praised other contributors, including Priscilla Alexander of Protravel and Allan Huntley of Abacus Travel. Both Uniglobe’s Andrew Henry and Carlson’s Don Kennedy also earned praise.
What It Means for Agents
The win is important to all agents for several reasons. First, the IAP was vindicated as a means of fairly resolving disputes between agents and ARC. Second, it vindicates the central role ASTA now plays in representing the industry. Third, it suggests that a unified travel agency industry can effectively fight for its interests.
ASTA’s CAC proved a major asset, as did ASTA’s government and legislative relations program headed by Paul Ruden, Esq. ASTA was once again able to marshal talented agents and industry leaders. This includes Carlson and Uniglobe as well as American Express and all the consortia that participate in the CAC. In turn, the CAC gave strong support to ASTA, including Carlson’s Roger Block, Uniglobe’s Henry and Uniglobe’s Chairman U. Gary Charlwood.
ASTA, along with Carlson and Uniglobe, is also a member of ARC’s Joint Advisory Board-Agent Reporting Agreement (JAB-ARA), which regulates the ongoing, and often stormy, relationship between agents and airlines.
ARC’s president and CEO David Collins took a different view. While respecting the IAP’s authority, Collins expressed disappointment and said the IAP’s decision could hamper making the travel agency channel more cost-competitive with other distribution options.
As a result of the IAP decision, ARC said it would cancel the previously scheduled (July 24, 2008) collection of additional fees under the proposed ARC plan and recalculate the 2008 fee structure. ARC will make whatever adjustments are needed to refund or adjust agency collections, ARC said.
Why is the victory important? Clearly, travel agents need effective, ongoing representation to protect their legitimate economic interests. And this means supporting ASTA and strengthening ASTA’s ability to represent agents. The battle with ARC over fees won’t be the last challenge professional agents or ASTA face.