Agent Issues ARC says new Memo Manager tool will streamline resolutions By Dennis Schaal / July 02, 2007 Share 1 -- The age of the virtual debit memo is drawing near, but whether it will add efficiency or an airline bully stick to the carrier-agent relationship remains to be determined. ARC is set to roll out ARC Memo Manager, a Web-based tool to automate the debit- and credit-memo processes, and its use is expected eventually to become mandatory if enough airlines adopt it and require agencies to get on board.That seems likely since, so far, 21 airlines have preregistered for Memo Manager, which is slated to debut in mid-July. The idea is that the tool will enable agencies, GDSs and airlines to resolve contested memos and settle them electronically.Though no major U.S. airlines have actually registered, Allan Muten, ARC's director of marketing and communications, told Travel Weekly he "fully expects" major U.S. carriers to sign on "imminently."ARC, after all, is controlled by the U.S. majors.Northwest, the only carrier to comment, said it was studying the technology.Individual airlines have the option of requiring agents to use Memo Manager to resolve and process debit and credit memos, which often are a high-volume affair.Debit and credit memos are estimated to have triggered a million transactions in 2006, split about evenly between those settled through ARC and those resolved bilaterally between agencies and airlines outside of ARC.Muten said ARC "reasonably expects" that some airlines will require agencies to process debit and credit memos through the tool. "It's been part of the conversation, although it is not a done deal," he said. "It's more on the carriers than on ARC or the agents."The only precedent for this kind of rollout was ARC's introduction of its then-voluntary Interactive Agent Reporting sales and settlement system in 1996. The IAR was made "universal" -- ARC-speak for mandatory -- in 2002.If ARC Memo Manager gains traction among airlines, it could become mandatory for agencies a lot more quickly than the seven years it took IAR to go that route."There's an expectation that there shouldn't be any hesitation by anybody to adopt it," Muten said."It just makes sense."At last count, 1,170 agency main-office locations had preregistered for the tool. Among them was Expedia, which in fact was named in the ARC announcement about Memo Manager, and Muten asserted last week that some major mega-agencies had signed on, as well.ARC Memo Manager gives airlines, agencies and GDSs an alternative to the current method of processing credit and debit memos for things like retroactive commissions, on the plus side of the ledger, and the improper use of discount codes or wrongly overridden fare rules on the minus side.Today, airlines often mail or fax debit memos to agencies and then the parties haggle over the phone, by fax or letter, if the amount of the memo is contested.Debit memos, of course, are much more likely to be contested than credit memos.The situation today gets more complicated if the agency claims that a GDS error is at the heart of the dispute, in which case a third party enters the fray.Currently, once the amount of the debit memo is agreed upon, agencies manually key the amount into their IAR sales reports and it is settled through ARC.ARC says that Memo Manager is designed to streamline the process, improve data accuracy and save agencies and airlines a bundle of money by making the resolution process more efficient.The tool is intended to enable the parties, including the GDSs, to conduct their dialogue and settle the matter electronically, Muten said, adding that they even could attach documentation to augment the discussion."Thus, all parties to the transaction can speak from the same page in that they are all looking at the same correspondence," Muten said.ARC Memo Manager, which has unpublicized transaction fees for airlines and none for agencies, still gives some control to agencies, Muten said.Agencies will view the debit memo online in Memo Manager. If they accept the amount, it will automatically correct their sales reports.If the agency agrees to pay a reduced amount, that transaction is entered into the sales report, the airline is informed of a partial payment and the disputed amount becomes an open receivable, subject to the parties' agreement.Much of the manual part of the current resolution process is thus shorn away, according to ARC.Agents, airlines and GDSs can import documents into the online memo they are working with to press their arguments, obviating the need to mail, fax or e-mail them, and giving the parties ready access to the "paperwork."ARC claimed that the new tool would reduce costs for all parties and improve the data quality and accuracy.ARC's data warehouse, the ARC Compass, will support Memo Manager as it retains various process records for 39 months and can link credit and debit memos to prior transactions, Muten said.Despite all the preregistrations, several agents and airlines contacted by Travel Weekly last week said they were unfamiliar with Memo Manager and thus couldn't comment about it.Paul Ruden, ASTA's senior vice president for legal and industry affairs, said the Society had not endorsed Memo Manager because it hadn't seen the tool in operation. But he said that it appeared to offer "significant efficiencies.""If this thing works right and does attain broad-based acceptance on both sides of the aisle, it is like everything else in the computer age," Ruden said. "You have to go along."He added, "You can't have a handful [of agencies declining to use the tool] raising the costs for everyone."Ruden said he did not expect it to be a problem, but one risk that concerned ASTA was that Memo Manager could conceivably be used as a way for "the entire airline industry" to "slam agencies with a sledge hammer."That's because prior to 1984, in the days before ARC and airline deregulation, Ruden recalled, "an agent couldn't afford to stand his ground" on small amounts in dispute with airlines because an airline-agency conflict on debit memos would sometimes put the agency in default with all carriers.He thus did not want Memo Manager to be used as a vehicle to "enlarge a dispute between one agent and one carrier" into a conflict between that agent "and all the carriers."Pat Funk, executive director of ARTA, said Memo Manager "on the whole is a good thing, certainly for large agencies who could have a lot of" memos."The fact that the parties can do everything electronically should make it easier," Funk said.However, Richard Eastman, president and CEO of the travel-technology consultancy the Eastman Group, sought to put the introduction of Memo Manager into perspective, noting that it "still requires human intervention" and "is a function of the embedded legacy processes in the first place.""Sales validation, confirmation and entitlement should be confirmed at the time of purchase and not after the fact, as it is done in the airline industry," Eastman said.He added: "There is automation, and then there is automation."To contact reporter Dennis Schaal, send e-mail to email@example.com.