Mark Pestronk
Q: Our agency has a large corporate client that would like us to provide our services to the corporation's employees in Mexico, all of whom speak at least some English. We can propose to serve those employees in any of three different ways. First, our employees here in the U.S. can do all the work, either full service or using our online booking system. Second, we can take calls and online bookings in the U.S., make reservations here and then send the record to the travel agency in Mexico for ticketing and issuance of travel documents in their preferred language, which, of course, is Spanish. Third, we can contract with a Mexican travel agency for it to provide the services in Mexico. I have a couple of questions. First, is it legal for us to issue tickets for travel from Mexico? Second, if we have an arrangement with a Mexican agency under either the second or third option, what would be some key provisions of such an agreement? Finally, which option would you recommend that we propose?
A: It is legal for a travel agency in the U.S. to issue airline tickets, make hotel and car rental reservations and make other travel arrangements for people in Mexico for travel within Mexico, to the U.S. or to any destination. The only exception would be travel to countries that are on the U.S. Treasury Department's Office of Foreign Assets Control list of sanctioned countries.
Such ticketing is also permitted by ARC, which has no rule regarding the location of the client. Some airlines may restrict certain fares and commissions to U.S.-originating travel, so you would have to consult the fare rules and commission agreements.
So you could use the first option, if that is the corporation's preference. You might want to propose a higher fee for full-service bookings or online bookings with agent assistance if your staff might need to spend more time on travel arrangements for clients whose native language is not English.
If the corporation prefers the second option (i.e., you handle the arrangements and transmit them to Mexico, and the Mexican agency issues the tickets and other travel documents), you should know that many large agencies have such arrangements, and they generally go smoothly if both companies have the same GDS. This is what I call a "fulfillment arrangement," and the contract between the parties would typically call for the Mexican agency to remit to you most of the transaction fees and most of the commissions for air (if any), hotels and cars.
If the corporation would like the third option (complete service by a Mexican travel agency), then your role would be limited to consolidated management reporting, liaison with the client and general supervision of the local agency's work. I call this a "subcontracting arrangement." If you split commissions, your share would be much less than with the second option, as you would not be doing most of the work.
If the corporation has no preference, I recommend the first option (full service by you). You get to keep all the revenue, and you don't have to worry about whether your fulfillment partner or subcontractor is doing a good job.