A solution in search of a problem

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Mike PremoMark Pestronk's column in the Nov. 14 issue of Travel Weekly [Legal Briefs: "Outside U.S., IATA offers agents recourse if airline lifts plate"] suggests that the U.S. is "the most backward country in the world" for travel agent rights because ARC does not provide the ability for an agent to use the travel agent arbiter program to force an airline to sell and settle tickets through that agent, while IATA agents have that ability. 

While it is true that an airline may unilaterally suspend or terminate an agent's ticketing authority in ARC's reporting and settlement system, I take exception to his characterization of this being a "glaring injustice."

First, there is the business aspect of this.

No airline, in my experience, wants to terminate an agent that ARC has accredited on that carrier's behalf. On the contrary, they want that agent to sell as many tickets as possible, provided the agent plays by the rules.

I sympathize with agents in some aspects of this because we do see situations where a carrier's rules for agents seem onerous. That said, it is the carrier's right to set rules and to enforce them. That is a premise of a principal-agency relationship in the U.S.

Many of our major airlines accept what we call our "general concurrence model." Carriers that accept general concurrence automatically accept all agents accredited by ARC unless or until the agent violates some provision of the ARC Agent Reporting Agreement.

While ARC's major airlines (including Delta, which is purported to be the cause of concern to Pestronk's unnamed questioner) use our general concurrence model, they place individual, customized conditions on that appointment. Such carriers seek considerable information as they weigh whether to approve and do business with that entity; it is not a foregone conclusion.

Allowing an organization to be a carrier's agent is not solely ARC's decision, nor is it a decision to which I would foresee carriers agreeing to be bound by third parties. They take these decisions too seriously to do so.

The travel agent arbiter program has a long and respected history of fairness in arbitrating disputes between ARC and agents. Indeed, the program is freely available for agents and airlines to resolve disputes, provided that both parties agree to use it for that purpose. To date, airlines have not agreed to use the arbiter for the purpose Pestronk proposes, but there is no restriction on them to do so in the future.

Second, I would also like to point out that thanks to much hard work done by travel agencies, ARC and airlines at the formation of ARC, U.S. travel agencies enjoy protections not afforded agents in the 149 other countries cited by Pestronk.

Agencies and their associations enjoy access to ARC via our Advisory Council. ARC is also required to consult with travel agencies and their associations each year in determining the annual fees that ARC will charge to agents.

Individual agents do have access to the arbiter program for recourse in many ARC-related matters. Agents and their associations have further protections by being able to appeal to a three-person independent arbiter panel on industrywide matters.

Agents won a major dispute relating to ARC's fees in 2008 in an appearance before the independent arbiter panel. All these protections are codified in a settlement agreement, and many of them are not available to IATA agencies in any country in the world.

One might argue that it took a lawsuit to obtain these programs, but I would counter that the arbitration provisions preceded the lawsuit and have been a hallmark of ARC and its predecessor for some time. Moreover, experience has shown that many of these consultative provisions make good business sense for ARC, and we are committed to them.

As a result, I would hardly characterize the U.S. as a "backward country" on this basis.

Finally, Pestronk is correct when he says that I want to make ARC a more agent-friendly place to do business. ARC has reached out, and continues to reach out, to agencies on a wide array of topics.

In 2010, we conducted more than 40 Voice of the Customer interviews with agencies of all sizes from coast to coast, seeking areas where we could improve.

In the past few months, we met with 11 agencies (midsize, mega and online travel agencies) and ASTA, specifically to discuss changes to the Agent Reporting Agreement. I am meeting with agency CEOs and other executives to ensure a positive relationship with agency staff engaged in day-to-day ARC settlement activities, and also with the leaders of those businesses to make sure we provide value now and in the future from their perspectives.

In none of those conversations to date has the "injustice" Pestronk finds so "glaring" been raised as an issue.

After 12 years working as an ARC-accredited agent and 10 additional years at SatoTravel under airline ownership, I have a deep respect and admiration for agents. Theirs is an immensely challenging business that is subject to ever-changing rules, including those from airlines.

While the ARC environment can and will be further streamlined and made simpler with respect to doing business (for airlines and agents alike), Pestronk seems to be offering a solution to a problem about which agents have expressed little or no concern.

Mike Premo is the president and CEO of ARC.

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