Wal-Mart this month became the first company to settle non-U.S. airline transactions through a U.S. point of sale, overcoming logistical hurdles with the support of American Airlines, ARC, Sabre and Universal Air Travel Plan.
Wal-Mart confirmed that it is settling American Airlines transactions made in Canadian dollars and Mexican pesos solely through ARC, rather than other bank settlement plans. Now, Wal-Mart will be able to consolidate all North American transactions with its major network carrier into one settlement data stream.
Wal-Mart director of global travel services Duane Futch said the initiative "streamlines processes from booking to fulfillment," consolidates multinational ticketing data, "allows our countries to obtain in-country pricing and complete airline ticketing transactions in a local currency," provides reporting in the local currency and "eliminates financial discrepancies due to exchange rate fluctuations for all tickets."
Although the project now is limited to two currencies and a single airline, Futch said "the implementation of this prototype process will pave the way for financial settlement in additional currencies in the near future." Wal-Mart is working to bring two undisclosed currencies and at least one other airline into the program.
Wal-Mart corporate travel manager of international operations Mary Sharp said, "The process hasn't really changed except instead of U.S. dollars, we're issuing the ticket in that currency. When the ticket comes through for payment, it's still settled in their currency, which we're doing now through our UATP agreement."
Futch said, "The only thing that changes is they book in local currency, we e-ticket in local currency, they pay in local currency, and you don't have to worry now about the exchange rate fluctuations for ticketing or exchanges, and that's the big piece."
Futch said the new process went live on Dec. 3, and now all North American transactions that involve American Airlines are settled in this manner.As long as one segment is on American Airlines, the tickets could be settled this way, he said.
Though the initiative represents a first in travel management and paves the way for a long-held travel management goal of global settlement, the ARC prototype is not without its limitations. Both ARC and Wal-Mart representatives characterized the effort as a small, though meaningful, step.
ARC vice president of marketing, sales and customer care Mike Premo said, "The ARC prototype is limited in the number of countries. It's fair to say that all the work of all the parties in this thing have focused on a limited-prototype sort of capability. We might be able to add one, two or three more currencies to the mix, but our prototype doesn't go beyond that."
UATP vice president of operations and services Gary Zannotti, however, said it would be easier for UATP to move forward with more currencies should ARC and other suppliers come on board.
"We already deal with multi-currencies, but we were approached by Wal-Mart, American Airlines and ARC," Zannotti said. "We receive a feed from ARC already, but the ARC feed is U.S. dollars only—that's all they could do. We worked with Wal-Mart and American and ARC and Sabre, and we allowed basically for ARC to be able to go beyond U.S. dollars and into other currencies. That was a process of some changes on ARC's side and our side."
Though this paves the way for additional currency settlements by Wal-Mart, it may prove difficult for other ARC-accredited Corporate Travel Departments or travel agencies to quickly follow suit because of the tricky proposition of aligning airline, payment system and governmental cooperation.
Premo said this method of doing business is now available to other CTDs "if they can get a carrier to pursue it with them. I would describe this as a very, very baby step. There's a prototype software implementation for Wal-Mart that accommodates one form of payment and one carrier in two countries outside the U.S. It's a very modest, very small step." Premo said agencies are less likely to pursue the settlement method.
However, Futch said several travel buyers that operate CTDs already have reached out to Wal-Mart in the interest of adopting a similar process at their companies. "We've had inquiries from several CTDs, many of which are our Wal-Mart suppliers," Futch said. "Others are talking to ARC about it. We have offered our assistance to several that have called."
Premo added, "It would be wrong to give people the impression that global Wal-Mart activity is all flowing through ARC, UATP, Sabre and GetThere and it's all a highly integrated solution. That's not the case. Wal-Mart has centralized a lot of their work and fulfillment activity in Bentonville, Ark., but with these two countries as exceptions, and only for this one carrier, everything is still being handled the same way any other corporation that might choose to try to do this would do it. You've got an exception for a carrier in two non-U.S. markets."
Even so, Premo said that Wal-Mart's new approach "is a first. It's been a lot of hard work and a lot of cajoling and threatening, and wailing and gnashing of teeth and rending of garments to get here."
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