ARC's CTD Presents Buyers With New Options
<B> ARC's CTD Presents Buyers With New Options</B>
By Tammy Troilo
<i>Tammy Troilo is president and CEO of the Westerville, Ohio-based travel management consultancy Troilo & Associates.</i>
Never before have corporate travel managers had so many options for structuring travel management programs, vendor relationships and operational designs, thanks to the Airlines Reporting Corp. Corporate Travel Department appointment.
Unfortunately, there has been a tremendous amount of misinformation circulating about the new CTD appointment, the intentions it serves and the opportunities it offers. The appointment is the result of requests made by a multitude of U.S. corporations, large and small. After years of resistance, ARC has complied.
Some critics have charged that this action is yet another strategy by the airlines to circumvent the travel agency. Not true.
ARC is simply offering Corporate America the opportunity to better control service delivery, travel fulfillment processing and financial returns. It's all about the opportunity to control travel fulfillment services, which up until a few years ago was typically a free service that agencies provided to corporations.
Today, most agencies offer financial programs that presumably return all vendor-generated revenues back to their corporate customers. Corporate customers in turn pay the agency for services rendered through a variety of pricing scenarios.
When travel agencies began charging fees for service, due to commission caps imposed by the airlines, this created a paradigm shift. Corporations now need to define the relative value of their travel purchase to the agency's cost of service. Corporations need to determine how much control of their travel management initiative they wish to assume and how much to outsource to an agency, since the travel "transaction" costs determine agency pricing.
The CTD allows corporations to fully exercise their rights of control within their own organization.
By securing a CTD appointment, the commissions and other revenues generated by a corporate account are paid directly to the CTD-appointed corporation. Travel agencies no longer have to administer the "filtering" of commissions from ARC and then pay them back to their corporate customers. Corporate customers no longer have to be concerned about receiving their fair share or waiting months for a settlement. CTD-generated commissions are paid to the appointed CTD on a weekly basis.
With commissions, overrides and other financial incentives being paid directly to the corporation, the corporate travel manager may now decide how to invest that money to fulfill the travel management requirements of its company.
The nuts and bolts of the operation, including ARC processing, can be insourced, outsourced or what we like to call "Smart Sourced." This is the true beauty of the CTD. A corporation that is today operating with travel counselors on site, dealing directly with vendors and controlling its costs through creative initiatives may choose to bring the operational functions in-house. Another corporation seeking only to control the flow of financial returns may choose to outsource its entire operation. In between these two examples lies an array of operational options, limited only by your imagination. The notion that the CTD offers an "all or nothing" partnership with the travel agency community is nonsense.
Securing a CTD appointment sends a positive message to other vendors. It boldly states the intent to control the travel purchasing decisions and processes. Through that control, a corporation can move market share and support stronger vendor partnerships.
With an operational model built to support the specific needs of a CTD-appointed corporation, travel managers can concentrate on more important issues. Platforms offering operational control provide an opportunity to create a travel management program with a defined strategic approach. Smart travel managers are integrating travel management initiatives into the overall business strategy.
Some of these strategic initiatives provide the foundation to move into a more automated environment. Every corporation in America is looking at its systems architecture. Legacy systems and operational models are being redefined. Why should travel management be any different?
The role of the travel manager is evolving. Corporate travel managers and their skills are becoming more prominent in higher levels of management. Travel managers are business managers. They need all the tools to do their job. The CTD option allows the most innovative of travel managers to capitalize on emerging trends and take the next logical step in the evolution of business travel management.