ARC disputes Pestronk's views

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Jeannine HankinsonThose at ARC who have been intimately involved in revamping the Agent Reporting Agreement (ARA) that goes into effect next week have paid close attention to its coverage by Travel Weekly, specifically Kate Rice's article ["Immediate effects in new ARC pact," June 3] and then the two different takes on the updated ARA by Mark Pestronk in his Legal Briefs column ["Unwelcome changes in new ARC Agent Reporting Agreement," June 10, and "Several changes to ARC agreement will be helpful to agencies," June 17].  

We welcomed and appreciated the brisk and diverse consideration paid to the revised ARA by these two writers, as it confirms what ARC already knew: This updated agreement between ARC, agents and carriers is extremely important to the industry as a whole.

Besides being easier to comprehend, the updated ARA is much more applicable to the way the travel industry does business in 2013.

The revised ARA was the result of a collaborative effort involving agencies of all sizes and business models and representatives from ASTA, airlines and ARC. These independent entities worked together with ARC and ARC's Joint Advisory Board for the Agent Reporting Agreement, which approved the updated and innovative ARA after months of negotiations among all parties.

It is because of our travel industry partners' hard work that ARC feels it necessary to respond to Mr. Pestronk's columns in terms of correcting some facts and the misconceptions created by the lack thereof.

In his columns of June 10 and 17, Mr. Pestronk states that the payment dates from agents have been shortened from 10 to five days. This is accurate. What was missing, though, was that payments to agents would also be deposited five days sooner. Given that 55% of ARC-participating agencies receive deposits each month, this is a major plus for agency cash flow.

He also states that on or around an agency's anniversary date, it will have to "certify the names of current owners, officers, directors, ARC management qualifier and ARC Specialist. So, if your ARC Specialist quit last month and you haven't replaced him, you will clearly need to scramble before the certification deadline."

Mr. Pestronk continues, "If your agency was once owned by one or more people who were bought out or passed away and, like many owners, you never got around to filing the change-of-ownership application, you will need to get it done now before you can sign a certification about your agency's ownership."

The fact is that the personnel requirements contained in the first affirmation release are owners/officers and operational contacts. If there has been a change to any of the personnel listed, there should be no reason to worry or scramble. The agent indicating to ARC that a change has occurred can complete the affirmation process. They can then consider the affirmation process complete with no missed deadlines. ARC's accreditation team members will follow up with the agent shortly thereafter to assist him or her with the proper paperwork based on the change that has occurred. It's as simple as that.

An important area that also must be addressed in Mr. Pestronk's June 10 column is about personal guaranties. In it, he states that "ARC will be collecting a lot more personal guaranties from agency owners."

In fact, under the revised ARA, personal guaranties are required under limited circumstances for defaults, which may result in fewer, not more, personal guaranties.

For example, under the current ARA, each agent who is placed in a default status (for failure to pay in a timely fashion a dishonored draft or submit a sales report) is required to provide a personal guaranty, regardless of the amount or circumstances of the default.

However, under the terms of the revised ARA, a personal guaranty would be provided in those default situations where there's a danger of substantial loss (for example, in situations where a default amount that exceeds the amount of the financial instrument and/or there's a history of such defaults.)

Mr. Pestronk says that these personal guaranties will put marginal agencies "out of business within a year, and other agencies may decide to give up their appointments rather than agree to personal guaranties." Based on the details above, as well as the fact that ARC knows that without a robust travel agency community there is no ARC, this is an obvious misstatement.

Finally, Mr. Pestronk highlighted this sentence: "Agent acknowledges that all Transactional Data may be used by Carriers and ARC for processing Transactions, and any other lawful purpose." ARC added "and any other lawful purposes" to this updated agreement primarily as a matter of transparency.

We have used and continue to use agency-aggregated data in ARC's data products; only the carrier involved in the transaction sees transaction-level data for a specific agency.

While ARC had made agents aware of this in the past, we felt that, in line with ARC's more open and collegial approach with the agency community, this statement needed to be added to the ARA. It should be noted that ARC will never sell or release PII information to any agent, carrier or other entity not involved in the transaction.

Agents can continue to get the most up-to-date information regarding the ARA revisions by visiting the ARC website (www.arccorp.com/news/ara/).  

ARC has been very communicative over the past couple of years with all parties through the multiple phases of this effort. Transparency has been, and will continue to be, key to our success.

To that end, we would invite Mr. Pestronk to include us in these ARC and/or ARA-related articles in the future so that ARC can fully articulate the answers to some of these important questions. This will ensure that the industry gets the best and most current information, which I am sure Mr. Pestronk would agree is beneficial to everyone.

In the end, ARC feels that the updated ARA is a touchstone in our continuing effort to be more cognizant of our customers' business needs by closely listening when they describe their challenges and, where possible, appropriately adjusting our policies and procedures for the good of all parties. The 2013 version of the ARA is one way we say to agents, "We get that."

Jeannine Hankinson is ARC's managing director, client services.

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