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Heeding corporate travel buyer complaints about the lack of reporting to identify, reconcile and manage the growing volume of ancillary fees, Continental Airlines and MasterCard Worldwide have initiated separate but related talks about reporting standards for such charges while United Airlines added details to credit card feeds.
MasterCard plans "to put a task force together and look at this from an industry perspective," according to large and middle market segments group head Marcie Verdin.
Continental has tasked its corporate advisory board to define the optimum credit card data feed for ancillary fees at its next meeting in December, said global accounts director Cyndi Hunter. Separately, Continental and the National Business Travel Association Aviation Committee are "exploring ways to get feedback" from a broader base of corporate travel managers.
Corporate buyers identified the data shortagessoon after airlines implemented ancillary fees for first and second checked bags and have continued to echo the need at industry events including at the Association of Corporate Travel Executives’ Minneapolis forum and The Beat Live, both last month. Credit card reporting provided no detail to identify what was purchased or to link bag, upgrades, food, pillows, seat assignments or other fees to a ticket number, flight or origination and destination city, buyers complained. As a result, buyers, their travel management partners and data consolidators have had to create reports to try to match charges and dedicate resources to manage the spend, attendees said. Buyers also have been forced to calculate exactly how much they are spending on each airline.
"I can give [Continental Airlines] $150 today and my expense team--through my American Express card--would never know what I gave $150 for," Oracle Corp. corporate travel buyer Rita Visser said at The Beat Live. "So again-- I said it last year--when your problem becomes my problem and now I have to put extra people in place behind the scenes to solve that $150 problem and ask the pertinent questions ... that's when corporations look at it and say, ‘Maybe I am glad to pay $150. I just want to know what it is for.’ "
At the ACTE event, a United Airlines sales representative said her carrier had enhanced billing detail on credit card data feeds to identify first and second baggage fees, upgrades and other customer options. Still in development, the rep said, is reporting that aggregates data by corporate account. Delta-Northwest had yet to alter such billings, confirmed its sales reps.
"We've taken great strides to recognize the need to be able to identify the specific products that a customer buys," according to United distribution director Kathleen Bennett. However, Bennett couldn't say whether credit card companies, banks, acquirers and data processors were correctly parsing the data.
"Where United is putting baggage isn't where one would expect," MasterCard's Verdin told Management.travel. "It is in a field and that's great, but it's not like we've said, 'Put baggage in this field.' We need to look at that addendum record--all of the different types of charges--and really specify the fields, the length of fields and where we expect to get the data."
MasterCard also will have to "work with acquirers and make sure they don't drop that data," as it moves through a reporting pipeline, added MasterCard Worldwide global commercial products group executive Steve Abrams.
Asked why MasterCard simply doesn't define required data elements as it has done for other Level 3 travel data, Verdin said, "That's exactly what we've looking at. We have the Level 3 addendum record, but if we don't define where that data needs to go," it may end up in various fields. Each card company has different file specs.
AirPlus International president Richard Crum has already identified inconsistencies. Analyzing ancillary fee billing data for United, Continental and American airlines, Crum noted the variances. United identified the first bag fee in the addendum detail, Crum said. For inflight charges, United changed the merchant name to "United Inflight," but provided no detail about what was purchased. Continental also passed through data on baggage fees, "but appends the service to the (travel agency) name field." American thus far provided no data, Crum said. "That makes it difficult for us to write a basic rule that says, 'When an airline charges these other types of fees--bag, upgrade, cabin or whatever--it's always going to look like this so we can always run this routine or add it to a query so you can add it to the price of a ticket,' " Crum said. "Customers want the total cost of a trip. Until we have some type of standard, we can't do that.
"It isn't just making a change one place; it's understanding how it's shown as merchandise that can be purchased, understanding what's going to be sent in the credit card merchant file, what's going to be in the addendum file and what's going to be in the PNR if there is any bundling," Crum added. "We are still in a little bit of a Wild West for how the implementation of these charges for different services in the disaggregation of the airline product is going to turn into a data feed that a corporation can depend on."
Visa Inc. head of global commercial solutions Darren Parslow said airlines "all have our specs; they know exactly where they can map it. We just can't control the quality of the data they put in it. Not all airlines are consistent," in the data they pass through, he explained. "Some pass some of it, some pass none of it, and some pass all of it. It's an area that just popped up overnight when the polices of those airlines changed. There wasn't time for the industry to come up with a consistent manner."
Continental worked for five months with one credit card firm to map fee details on card feeds. "But we realized that it's not necessarily resulting in the reporting that we expected," said Hunter. "That's when we realized we really needed to engage our corporate travel buyers in the discussion--essentially starting on the output rather than the technology."
"It's taken a long time," said Continental senior vice president of sales Dave Hilfman. "It's far more complex than we thought."
Hunter said she now is talking with four card companies: AirPlus/UATP, American Express, MasterCard and Visa. She said Continental initially sought a specific solution for a customer to charge back bag fees to the original form of payment for travelers who didn't have individual cards. Then the airline needed to tie the ticket number to the service transaction fee.
"We're willing to change our data output to meet whatever needs [customers] have," Hunter said. But elevating this topic among all the projects in the pipeline of credit card vendors "is going to take the support of our corporate travel buyers."
'Unknown' Not Acceptable
Outside of questions about corporate contracting and Continental's move to the Star Alliance from SkyTeam, Hunter said fee reporting is one of her clients' top concerns. In response to questions about ancillary fees, "airlines generally tend to say why we're doing it," Hunter said, but "buyers are far past the why" and want help in understanding unclear expenses. They "just can't live with an unknown."
Airlines during 2008 generated ancillary revenues of $10.25 billion worldwide, 345 percent more than in 2006, according to a report by consulting firm IdeaWorks. American, United and Delta topped the 2008 list of ancillary revenue generators.
In the first half of 2009, revenue from ancillary fees totaled $3.8 billion, more than double the total from a year earlier, according to the U.S. Department of Transportation's Bureau of Transportation Statistics. The data shows that "many airlines are now achieving approximately 4 percent of their operating revenue from ancillary fees," according to AirlineFinancials.com analyst Robert Herbst.
Despite the boom in ancillary revenues, American Express said such fees represent a small slice of corporate travel costs. "Across our client base, ancillary charges still represent well less than 1 percent of the total cost of air travel," said an Amex spokeswoman. "Although there is an increase, the total dollar value of these charges is insignificant. We are instead focused on enhancing a broad range of data and reporting solutions for our clients, such as hotel folio, benchmarking and our consulting services."
MasterCard's Abrams said the ancillary fee topic "may not be at the top" of the needs list still dominated by overall airline and hotel detail. "Sometimes, you just have to put it as a project that we can work on. It's still a lot of effort. First you have to define the data," perhaps offer an "incentive for that particular amount of data, or redefine what our Level 2 travel data means. It's a longer, drawn-out process."
Suppliers also must determine how best to identify the growing number of inflight purchases typically made with a swipe of a credit card through a smaller reader. Flight attendants don’t have time to key codes, card vendors acknowledge.
Added MasterCard's Verdin, "We need to make sure as an industry that we're reporting that data. So far, the airlines--except for United--aren't doing it. If the airlines aren't going to send us that data, can we work with the GDSs or different providers to make sure we're getting that breakdown? That is going to be the next managed travel spend. There will be policies around baggage and the number of bags, whether you can have meals or drinks on flights. If you can't capture that data, travel managers won't be able to manage it."
The Electronic Miscellaneous Document that ARC promises to deliver by mid-2010 could allow travel management companies to sell various fees at the point of sale and generate reporting. As part of that initiative, the Airline Tariff Publishing Co. has defined nearly 100 fees, but isn't involved in payment data specifications. For charges made on airline Web sites, at airport terminals and inflight, companies need greater detail in the card record.
Verdin and Hunter compared the need for industry standards on ancillary fees to the hotel e-folio initiative, in which hotel billing details now appear on credit card reporting for 68 percent of MasterCard's commercial card transactions, according to Verdin. But e-folio has taken more than a decade to gain such traction. Will standards on ancillary fee data reporting take that long?
"Everything is happening so much more quickly nowadays," Abrams said. Added Verdin, "And we've got XML, and that's so much easier."
Nonetheless, Abrams "couldn't say" how long it might take for customers to see detailed data on ancillary fee charges.
For now, AirPlus' Crum advised corporations, travel management companies and data aggregators to look for clues in the reporting to identify charges, such as the originating city. For example, both United and American changed the originating city to "XAA" for miscellaneous charges.
American Express said other "tell-tale signs of non-ticket-related fees and surcharges" also include "air transactions without airline ticket numbers or ticket numbers without associated class or fare basis codes, air transactions on the date of travel (rather than the date of booking) and air transactions under $55," said a spokeswoman.
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