Airlines in recent months have begun filing corporate negotiated fares directly with the Airline Tariff Publishing Co. for such clients as AT&T and Turner Broadcasting System Inc., a process made possible by new capabilities developed by ATPCo, the clearinghouse to which carriers file published fares.
This newer Fare by Rule process can be resource-intensive for carriers, but promotes greater automation and rate loading accuracy. It enables airlines to attach corporate discount formulae and client-specific fare rules to the fares they file to ATPCo. The global distribution systems that can accept the more robust ATPCo feeds automatically calculate the appropriate fare, eliminating the need for agents to manually apply corporate discounts at the point of sale or within such GDS templates as Sabre Snap, Worldspan SecuRate and Galileo Private Fares II.
However, not all GDSs uniformly can handle such data from ATPCo, dubbed Category 25 Fare by Rule
(BTN, Nov. 6, 2000). Galileo last year was first to develop the functionality and now offers it for all North American itineraries. A previously developed proprietary solution still fills the holes for other international itineraries. Worldspan claimed it has gone a step further, having developed the functionality on a global basis for its entire pricing system.
Several sources said it won't be long—perhaps a matter of months—before most major airlines and GDSs overcome various hurdles and take full advantage of the more efficient process, which minimizes travel agency debit memos and keeps negotiated discounts current with ever-changing published fares.
"We started this with Delta and Northwest and launched at the beginning of last month," said Sue Powers, Worldspan senior vice president of worldwide product solutions. "They are each doing it for 10 or 15 of their customers and we are working now with Continental and United."
Delta confirmed it now has such capability with Worldspan. "We are encouraging all the GDSs because it essentially brings dilution and auto-pricing errors down to zero," said Scott Slater, the carrier's general manager of corporate programs. "But this is a phased rollout for us because we have capacity limitations in terms of how many accounts we can do at once."
Galileo senior director of product innovation Randy Smith said every major carrier "in some way, shape or form" is filing Category 25 fares for use in Galileo. "Every corporation we have dealt with is eager to have the airlines take responsibility for this data," he said.
Filings within ATPCo Category 25—a fare subset implemented at the end of last year—are ramping up at "an exponential rate," said ATPCo president Mike Ferrier. "That data appears in all the infrastructure—revenue accounting, decision support, etc.—so the immediate beneficiaries are the airlines," he said. "The benefit to the GDS is higher-quality data that is less error-prone." But Ferrier acknowledged the industry has not yet fully embraced the new process. "We are in the adoption phase," he said, adding that GDSs and airlines are waiting for each other to be ready. "It's the chicken-and-egg phenomenon."
Ferrier said carriers whose primary GDS is more capable of dealing with new ATPCo capabilities logically are more likely to be filing Category 25 fares.
Northwest this spring began to directly load corporate rates to ATPCo, following its November fare restructure
(BTN, Nov. 12, 2001). "It became clear that this was a big concern for our corporate customers and agents who ticket for them," said Jina Sanone, Northwest manager of corporate programs within the sales group. "We are making progress toward completing the loading of all corporate contracts." Sanone said Northwest will load more corporate rates as the GDSs convert to accept the new Category 25 feeds from ATPCo.
"For Worldspan, we now only load into ATPCo. Likewise for Apollo/Galileo, domestically," she said. "Rates for Sabre still are loaded directly into Snap until Sabre is fully online with ATPCo."
According to a Sabre rep, the GDS will be ready to handle domestic Category 25 filings by year-end, with international functionality to follow in early 2003.
In the traditional and still widely used model, travel agents apply client-specific discounts at the point of sale, a method that risks agency errors and airline-issued debit memos. The GDSs in recent years developed tools—such as Snap, Private Fares II and SecuRate—to segment negotiated fares from regular published fares. That process, though steadily gaining popularity, still requires agencies to input increasingly complex contract specifics into templates. In either case, travel managers may opt to run audits to uncover rate loading and point-of-sale discrepancies.
Amadeus North America vice president of product management and customer service Bob Lowry said some agencies "still like the idea of having privacy" and that it is an issue of control. "We have not had a push from the agency community to deliver Category 25, but we'll support that direction. It should be ready sometime in 2003," he said, adding that Amadeus soon will make available a new method for agencies to input contracted fares with an easier, more graphical interface.
ATPCo previously developed Category 15 fares, which are the actual discounted fares available to each corporate client loaded by city pair. "The number of fares filed by O&D is enormous and you can imagine the complexity of filing them all and keeping them current," Worldspan's Powers said. "Category 25 now lets the negotiated rate float with what is in the marketplace."
Corporations also gain confidence in knowing that agents will produce fewer errors. However, some still opt to run audits to ensure proper rate loading by airlines. "The trend has grown in the past 12 months," said John Pifer, a consultant with Management Alternatives. "Larger corporations with more complicated multinational deals clearly want all this to be simplified. But usage thus far has depended on how much pain the company has experienced in relation to debit memos and improper fare loading."
Turner Broadcasting System, which uses Worldspan, for the first time this year had several preferred airlines load negotiated rates directly into ATPCo. "We had hoped it would be done by January, but it took a few months longer because this is a first for everybody," said Robert McGurk, the company's vice president of corporate travel services. "Nobody dragged their feet. It is just a matter of everyone getting on the same page."
Most of AT&T's preferred airlines this year also began filing the company's negotiated fares directly to ATPCo. AT&T agents primarily use Apollo. "With data complexity and deals these days excluding low-fare buckets, this is a step in the right direction for the airline to clear up some confusion and smooth the relationship," said Vinay Gupta, AT&T manager of global travel supplier management.
AT&T and TBS each asked that the cost of ATPCo fare filings be included in airline contract terms. Sources said carriers have become more willing to absorb that cost, which covers a fee charged by ATPCo, internal processing and resources necessary to educate salesforces and pricing personnel on the new tariffs and procedures. A few carrier executives, however, said they continue to evaluate the cost-value equation and the possibility of charging clients.
Meanwhile, McGurk said the agency—in Turner's case, WorldTravel BTI—has to provide more support work than first assumed. "Our travel management company had to modify their scripting and automated quality control processes to accommodate the ATPCo fare filings," he said, adding that preferred airlines requested that agencies verify rate loading accuracy. Nevertheless, the value of more efficient rate loading is clear to all parties, once airline, agency and GDS systems are aligned properly. "The fewer parties that are inputting the data, the fewer opportunities for misinterpretation," concluded ATPCo's Ferrier.