ARC is beginning a review of its accreditation practices that could be its most important undertaking for agents since the introduction of electronic reporting and the phase-out of paper sales reports.
In announcing his intent to review the agency accreditation system, basically unchanged for 50 years, ARC President Mike Premo said he wants to modernize, provide more transparency for airlines and simplify things for agents. ARC intends to begin this process by having discussions with airlines and agents, a process that Premo has called an "open and sincere effort to get input."
We're all for it. In fact, we are encouraging readers to share their ideas on our website and through Facebook and Twitter.
In any system that collects and disburses $6 billion or $7 billion a month between and among thousands of agents and hundreds of airlines, there are going to be complexities that get in the way of transparency and simplicity. But we have long suspected that ARC rests, as its airline owners rest, on some legacy practices and assumptions that need to be dusted off.
Why, for example, must Fred's Travel Agency adhere to a contract the size of a small city phone book in order to sell an airline ticket, when Fred's Hardware needs little more than a smile and a shoeshine to sell shovels and paint?
It's no answer to say the system works well. We all know that, for the most part, it works well. What we really need to know is whether this is the only way to make it work. The beauty of life in 21st century America is that such questions can almost always be answered, "Of course not."
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We believe ARC's intentions with respect to simplicity are honorable, but we also believe that agents need to remind themselves where ARC is coming from with respect to transparency.
It appears that one immediate catalyst for this review was the realization by some airlines that a few agents were, to put it bluntly, gaming the system in order to aggregate their sales and qualify for overrides.
Recall that in April 2010 ARC revised some of the paperwork requirements for recording certain ownership changes, stating that "a process intended to facilitate a complete change of ownership of a branch or multiple branches was instead being used to facilitate something short of that intended purpose." In other words, agencies were effectively sharing ARC numbers.
Rather than shouting "fraud" and pointing fingers, ARC showed admirable restraint during this episode. It took no punitive actions but warned that "we may be compelled to tighten the language in some of our accreditation applications even as we continue to look for opportunities to make the various application processes less burdensome wherever possible."
A few months later, in September, ARC began a series of audits, asking agencies with recent ownership changes to certify their ownership status with additional documentation.
When ARC speaks of its need to provide "transparency" for the airlines, this is what it means.
If the airlines are dealing, through ARC, with Fred's Travel Agency, they want ARC to be able to locate Fred -- and Fred's assets, if necessary. The airlines are entitled to expect that transparency from ARC, and ARC has to be able to deliver it. If it can't stand behind its agency participants and say to the airlines, "Fred is who he says he is," the airlines are going to cut Fred loose.