Q: A large corporation wants to become our client, but it is proposing an unusual arrangement: We would open an ARC-appointed branch office at the corporation's headquarters, and the office would be staffed solely by the corporation's own employees. Is such an arrangement legal under ARC rules? I thought agency locations have to be open to the public and staffed by agency employees. Why would an organization want to do business in this way, as opposed to having its own corporate travel department? What would we charge the client to make it worthwhile for us? What risks do we run, and what can we do to lessen those risks?
A: The arrangement that you describe is commonly called a "rent-a-plate" because the client uses the agency's branch accreditation in return for a fee that can be in the nature of rent. The term "plate" is a leftover from the days when each agency location had a metal plate with its ARC number to put in the ticket validator when issuing manual airline tickets.
Rent-a-plates have been legal since about 1980. Before corporate travel departments could get their own ARC appointments, there were probably several thousand of them. There are still quite a few left, although I don't think that ARC keeps track of the total number.
Years ago, it was necessary for every travel agency location to be accessible to the general public, but this is no longer the case. Although your headquarters location needs to be staffed by one or more qualified personnel on your payroll, a branch can be staffed entirely by the client's employees.
A corporation might want to use your branch appointment for several reasons: to access superior supplier deals, to shift administrative burdens and liability onto you or because it wants to stick to its core mission instead of being in the travel business.
Agencies typically charge a fixed fee per ticket, a percentage of monthly volume or a fixed monthly fee. In return, besides allowing the client to use your appointment, you could perform several services, including providing access to your GDS or online booking engine, reporting and quality control of ticketing.
In addition to being paid by the client, you can benefit because the increased sales volume will result in more commissions. If the client has the same preferred suppliers that you do, your market-share overrides could increase substantially.
Since the client makes its own reservations and issues its own tickets, the big risk to you is that the client could violate airline or ARC rules, and you would be responsible. Indeed, an unscrupulous client could put your agency out of business by issuing millions of dollars in unpaid cash sales or unauthorized credit card charges.
Therefore, you need to pick your rent-a-plate clients with care. You need to make sure that the client has experienced travel agents staffing its branch office.
You also need to have a written contract under which the client agrees to indemnify you against all liability arising out of its reservations and ticketing. Often, such contracts specifically include prohibitions on back-to-back and hidden-city ticketing.
You need to ensure that the client understands its obligations to safeguard e-ticket numbers in accordance with the rules in the ARC Industry Agents handbook, and you should require safeguards against phishing attempts and unauthorized credit card charges. Finally, you need to prohibit the client from signing any supplier contract in your agency's name.
Rent-a-plate arrangements can be highly rewarding, but you need to make sure that you understand the risks involved.