It has been about four
years since the Airlines Reporting Corp. started allowing
corporations to get their own ARC appointments for their in-house
corporate travel departments (CTDs).
How successful has the ARC program been? How much of the
corporate market have travel agencies lost to appointed
CTDs?
A: ARC made its CTD experiment into a permanent
appointment category on Jan. 1, 1999. Since then, 150 corporations
have obtained ARC approval.
During the same four years, the total number of authorized
ticketing locations fell by 17,000. The total number of agency
on-site branches, which are an alternative to appointed CTDs,
decreased by 450.
Because the numerical decline in travel agency on-sites is three
times greater than the numerical increase in CTDs, I believe the
latter have made only minute inroads into the agency business as a
whole or the on-site business in particular.
There still are 20 times as many agency on-sites as appointed
CTDs. Therefore, roughly speaking, we could speculate that the
latter have captured about 5% of the potential market.
However, in many cases appointed CTDs are paying fees to travel
agencies for consulting services like quality checks, management
information system (MIS) reports and assistance with supplier
negotiations.
Therefore, even this volume really hasn't shifted away from
travel agencies in any meaningful sense.
With the abolition of base airline commissions, there is almost
no difference between an agency on-site branch and a CTD
anyway.
At agency on-sites and CTDs, all staff can be employed by the
corporation. Although the CTD takes on additional liability for
loss or theft of ticket stock, every agency's contract for an
on-site location shifts the agency's liability to the
corporation.
For the corporate travel manager, an appointed CTD may impart a
degree of control over one's destiny. Agencies may come and go, but
the ARC appointment stays.
Perhaps that is why CTD appointments appeal to the segment of
corporate travel managers to whom such control is important.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He answers your questions in the TravelWeekly.com
Legal Ease forum. To contact Mark directly, e-mail him at [email protected].