Mark Pestronk
Mark Pestronk

Q: My agency's GDS vendor is trying to collect the shortfall fees that my agency owes for failing to achieve our annual booking goals for the last year and a half. A year ago in your Sept. 7, 2020, Legal Briefs column, "Don't count on waiving of GDS shortfall penalties," you stated, "Your options are limited, but there is no rush to make a decision because thousands of agencies share your predicament, and there is no way your vendor is going to shut off access to content in the near future or sue for the debt anytime soon." Is that still true, and if so, what would you recommend that we do now?

A: It is still true that thousands of agencies share your predicament, with no end in sight, and it is still true that it is very unlikely that your vendor will shut you off for unpaid shortfall bills. I know of no agency that has been cut off against its will, although there are certainly some that have voluntarily given up their GDS access.

If you have fewer than about two years left on your contract, the vendors have generally been receptive to forgiving some or even all of the debt in return for a new contract or an amendment to the existing contract reducing the quotas and potential penalties for future years. New contracts are typically for three years for small agencies, five years for midsize agencies and six or seven years for large agencies.

One vendor has typically been offering a choice of a) a new contract with a moderate annual quota in return for forgiveness of all outstanding debt or b) a new contract with a very small, achievable quota in return for payment of half of the shortfall fee. Most agencies, being cash-poor, have chosen the first option, although they are taking a chance on future productivity levels.

As you will have expected, none of the vendors is offering a signing bonus. Except for very large agencies, the per-segment incentives are likewise small, at least compared with what the vendors were offering pre-pandemic. Even with added incentives from the latest Southwest and Delta GDS deals, the average segment offer is generally considerably lower than it was in 2019.

If you have more than two years left on your contract, you could consider just letting the shortfall bills pile up until you have fewer than two years left, and then soliciting a new contract. Although this tactic will add to your stress, it may help to remember that you are not unique.

One more thing: In my experience, if you give up your GDS contract and get a final bill for thousands or even tens of thousands of dollars, your vendor will probably be very receptive to a lower settlement offer. If you are contacted by a collection agency, it probably means that the vendor has given up collecting from you, so the collection agency will definitely be receptive to a small settlement. 

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