Payment systems AirPlus International and MasterCard Worldwide are developing a solution that would enable travel buyers to report ancillary airline charges, paralleling similar efforts of U.S. airlines, technology companies and settlement providers. However, the foundation of such a solution—an electronic miscellaneous document that essentially would establish an e-ticket for ancillary charges—will not debut until the second half of 2010, at the earliest.
Meanwhile, American Express said it is pursuing an ancillary fee-reporting solution with a large U.S. carrier.
The AirPlus/MasterCard initiative would provide reports with accurate and standard notification of the airline ancillary fee types, including checked-bag and seat-upgrade charges. First, though, industry stakeholders must agree on at least some level of standards after the EMD system is in place.
The first EMD incarnation not only will enable airlines and travel agencies to sell and track ancillary services at the time of booking, but also will serve as the underlying technology for card companies to offer more detail on air charges made after the fare is booked.
AirPlus International president Richard Crum said some necessary standardization would include procedures for airlines to process such fees similarly, common locations where carriers would record data and the code or language they would use to identify each fee type.
Sources said fare-filing organization Airline Tariff Publishing Co. is developing a standard set of codes for each ancillary fee category, which then can be put into global distribution systems. "That is the base level of standards that we are going to need to be able to serve our customers," said Crum. "Standards are more important than everybody trying to rush for a solution on their own."
One-off standards developed by individual payment firms are "the wrong direction for our industry," he said. "Not only is it going to create more fracture in terms of what a customer is going to see and how it is going to translate from one airline to the next, it certainly won't work on an international level where you introduce all new types of carriers and systems."
Meanwhile, a spokesperson said American Express recently began working "with a major U.S. carrier to define a solution that can be rolled out to other airlines," but added that ancillary fees comprise less than 1 percent of Amex's corporate card clients' total air travel cost. "We are more focused on enhancing a broad range of data and reporting solutions, such as hotel folio, benchmarking and consulting services."
However, an Association of Corporate Travel Executives survey released last month shows ancillary air fees concern travel managers, as 29 percent of about 300 travel buyer respondents said they do not manage the total cost of trip well and 51 percent reported that they manage it only somewhat well, primarily due to the difficulty of tracking such fees.
"At this point, you swipe your card and all it says about that transaction is that it was with an airline," said travel management consulting firm Consulting Strategies principal David Hillman, who specializes in payment systems and e-procurement.
Travel buyers have developed workarounds that lean heavily on guesswork. One common method is to assume all airline charges of less than $50 from corporate card data are checked-baggage fees.
Midmarket travel buyer OSI Systems even automated the process, guiding its expense management software provider to build new expense reporting fields for specific airline charges separate from the fare. Although card data displays the fees as generic airline charges, "you might be able to tell by looking at the number what it is," according to OSI Systems global travel manager Frank Dolce. "I'd rather rely on the traveler."
Meanwhile, distribution technology firm Farelogix is testing EMD reporting that essentially attaches a record to a ticket when an ancillary service is purchased with American Airlines, United Airlines and a U.S.-based non-legacy carrier, said Farelogix president and CEO Jim Davidson
(BTNonline, April 1).Additionally, Airlines Reporting Corp. is leading the development of the settlement and agency piece of the equation with American Airlines and some airline IT system providers, expected to come in the third quarter of 2010, according to ARC vice president of marketing, sales and customer care Michael Premo.
American director of merchandising strategy Cory Garner said of the carrier's implementation of electronic miscellaneous documents, "We feel like we have our ducks in a row. What we're mostly concerned about is trying to get all the other technology companies that need to play in the distribution chain to make sure they have their ducks in a row as well. It doesn't really matter whether we can issue an EMD if a point-of-sale system can't display optional services, or if a corporate travel policy engine isn't ready for optional services."
Garner said that American's work with Farelogix would enable travel agencies "to sell optional services on our behalf" through the airline's direct-connect providers, which include BookingBuilder, Cornerstone Information Systems, GDSX, NuTravel Technology and Rearden Commerce. Such firms, Garner said, "are ready or are getting ready to tap into American's optional service capability." Still, Garner noted, "There are no GDSs on that list."
While the initial thrust of EMDs create a template for agencies and airlines to sell optional services at the point of sale, that does little to allay buyer need to know whether, as Garner said, an airline charge on the day of travel is "a checked bag or a Jack Daniels."
Garner noted, "That's simply something that our systems are not geared to do today with airport or onboard transactions."
As buyers hunt and peck at airline expenses found on expense reports and in charge card statements, EMDs can serve as what Garner calls the "master document," the thread that runs through a transaction, from the point of sale through the expense report.
"As American gets further into the EMD process, it becomes the data source on the travel agency side for back office reporting, but also on the credit card side for the master record of exactly what that transaction is. Once the EMD is there, I think credit card companies will be there as well. We have to solve the ticketing process first," Garner said.
Hillman said that while the issue of ancillary fee reporting may be top of mind for travel buyers, it comes down to a matter of motivation for card companies and carriers.
"If they go through the pain of making these changes, who benefits?" Hillman asked. "It's not the card companies, and it's not the airlines. To some extent they even lose by it. If you can monitor what people spend, you can better control it and travelers might not spend as much."