ARC Proposes Mandatory IAR
<B> ARC Proposes Mandatory IAR</B>
By Sarah Welt
<I>Arlington, Va.</I> - The Airlines Reporting Corp. last month announced a proposal to make Interactive Agent Reporting mandatory for all new applicants beginning Jan. 1, 2000, an action that has drawn fire from the American Society of Travel Agents.
ASTA president and CEO Joe Galloway said in a statement, "In the wake of the recent airline actions, which will force some agents out of business, I am amazed at the insensitivity of ARC's proposed plan to force new entrants to use Interactive Agent Reporting. While IAR may offer efficiencies for some agents, it may not be for everyone. For that reason, it is our belief that the end-user, the travel agent, should retain the flexibility of reporting manually or electronically. If the product is as good as ARC says it is, then the product will sell itself and there is no need for ARC to force it down anyone's throat."
But ARC wants to make it clear that this is simply a proposal at this point and it does not expect any resolution until the board of directors meets in December. Furthermore, ARC has said that the plan would exempt non-automated agent applicants (those using only manual ticket stock and without GDS connectivity). It will have no bearing on those agencies already approved and does not include any new branches of already approved agent locations.
ARC reported that, as of late last month, 48.5 percent of transactions were being processed electronically. However, that figure represents only between 35 and 40 percent of all agent locations.
ARC vice president, general council and secretary Kathy Argiropoulos said making IAR mandatory for the entire agency population is "never anything we considered." ARC spokeswoman Valerie Lange said some of the resistance for the proposal is likely due to industry rumors that ARC would make IAR a daily reporting system. "IAR is a weekly reporting system. People are worried that if we made it mandatory we were going to change the rules, and that is absolutely not the case." Argiropoulos said ARC never planned to have daily reporting and remitting. When asked if it could ever change, she said, "Sure. I wouldn't say never to something, but there are absolutely no plans to do so. We are not prepared to do so. Our systems are not capable of doing that type of settlement at this point in time."
Since 80 percent of all transactions processed by ARC are credit card transactions, that means that ARC pays the agent a commission. A presumed benefit of daily reporting would be that agents would get money back more quickly.
The real concern about daily reporting is for the 20 percent of agents doing cash transactions. Said president and CEO of USTAR Bruce Bishins. "Even if agents were paid by the customer on every sale every day there is no guarantee that the amount would be tendered into the agent's bank account before ARC's draft would hit. For example, if ARC went and assumed it would be entitled to all cash transactions by midnight on the day of sale and you paid the travel agent with a check, the agency community would have to factor that sale until such time as your check cleared, which means a severe financial impact."
Corporate Travel Management, a $10 million corporate agency based in Charlotte, N.C., which does cash remittance with ARC, is opposed to IAR. Vice president Daryl Swiss believes IAR eventually will become a daily process. "The way it is today, it's a wonderful thing. However, once they get a critical mass of travel agencies on IAR, they can offer no choice but to do it, then mandate daily reporting." That would hurt corporate clients because, "no longer will they be able to book a nonrefundable ticket and have that voided within that week. They will be stuck with whatever ticket they purchase."
In related business, Worldspan earlier this month introduced Coupon Suppression for both paper and airline ticket transactions as well as Miscellaneous Charge Order transactions. Coupon Suppression is designed to streamline the ticketing process and support paperless documentation for e-tickets and Worldspan service fee MCOs. Regarding Worldspan's announcement, as well as Galileo International Inc.'s deployment earlier this month of a paperless automated service fee solution for IAR agents (<I>BTN</I>, Nov. 1), Argiroupolos said, "We regard those efforts as a real step in the right direction.