With the Airlines Reporting Corp.'s board of directors voting to move forward with its agency fee increases for 2008, the American Society of Travel Agents has put its plans for legal action into motion. Bill Maloney, COO of ASTA, says the two organizations will proceed to a court-imposed arbitration panel, the third case to be heard in roughly 20 years. "We will come in and state our case and they make their case. It is a court-like process," he says.
Effective January 1, ARC plans to raise an agency's annual administrative fee from $145 to $395 per location, with branch fees increasing to $150. It has said the hikes are necessary due to technology maintenance and the creation of various revenue-generating products for agencies. The organization also was quick to note that agencies have not seen a fee increase since 1985, adding that under the proposed plan, several training and other miscellaneous fees have been eliminated.
ASTA wants more explanation, claiming ARC rebuffed requests for financial figures that justify the controversial increase. "We have tried to be reasonable right from the start," said Maloney. "If there are reasons for this, then let's talk about it from a business sense, but never have they divulged any of their numbers so we have no way of knowing if this [increase] is reasonable or not."
ARC says that though management has expressed desire to shift volume away from travel agent distribution and onto channels directly linking the consumer with the supplier, the organization as a whole sees agencies as a complement to direct channels. "However, the agent distribution system must not only be an attractive channel for the consumer, but must also be a cost-competitive alternative for the supplier," according to a statement issued by ARC, which declined further comment.
The date has yet to be set for the arbitration, and with ARC's increase set to go into effect at the start of the new year, Maloney says ASTA will ask that any potential fee increase be waived until the arbitration panel makes a decision. "We don't know if the arbitrator will have the power to do that," he adds.
Agents are unanimously opposed to the fee increase, according to Maloney, but for now, he says, "the next steps are between us and the arbitrator." (JM)