RC president and CEO David Collins
provided the following written responses to questions about daily
reporting posed by Travel Weekly:
TW:What will daily reporting tell airlines
that they don't already know? When agents make bookings for
clients, the reservations and payment information goes directly
into airline reservations systems. They have real-time data on
sales and availability.
Collins: Booking data are not accurate data
showing what actually takes place. The airlines need accurate
transaction data to take into their revenue recognition and
analysis systems and in today's environment that cannot be provided
until the sales week and subsequent days have passed.
TW:Does ARC have an idea of how frequently
forbidden voiding occurs? What is the dollar loss in that?
Collins: Our data analysis is focusing on
fraudulent voids where transactions that actually took place were
voided. Our analysis shows that, while the airlines experience a
void rate of 2% or under in other distribution channels, the
overall void rate in ARC is slightly above 6%. ... The void rate in
the small travel agent sector is 10%.
In taking this research to the next step, we have worked with
individual carriers and found significant numbers of cases where
passengers have flown but the ticket was voided. And these
occurrences are not limited to a few agents.
TW:Your letter noted that cash
transactions are settled 10 to 17 days later than credit
transactions. Why have the airlines waited until now to express
concern about the long float? Couldn't ARC just move the date for
drafting agents' accounts while staying with a weekly
cycle?
Collins: As stated, the purpose of moving to
daily reporting is to transmit transaction data to the airlines
daily. Remittance is a separate issue.
The airlines have raised these issues now because they are in a
severe financial crisis. Firstly, they cannot afford to underwrite
losses arising from abuse of the voiding functionality. Secondly,
receipt of faster and more accurate data is critical to managing
their airlines.
As we have stated, we will not be raising daily remittance in
the dialogue, but will be reviewing the disparity between
settlement of credit sales and settlement of cash sales.
TW:Some small agencies are concerned that
their part-time bookkeepers will have to come in every day instead
of once a week. Others have expressed concern that they will be
burdened with filing a report every day, even when they have no
transactions. What can you say to them at this stage?
Collins: We would say to them that this is
precisely why we are initiating the dialogue.
The issues we have raised need to be resolved, but we want to
work with the travel agent community to make sure that the
solutions will work in their business process.
A key issue is that we need to be able to send clean and
accurate data to the airlines daily. It may not be necessary for a
bookkeeper to come in daily.
The way a daily system might work, for example, is that, where
Day 1 is the day of the transaction, the data go into the travel
agent's IAR report that night and the data are available in the
travel agent's IAR report on Day 2. The travel agent would have Day
2 to correct any errors in his IAR report and on Day 3 we would
send the data to the carriers.
Twenty-eight percent of ARC locations would only have to review
one (or fewer) tickets per day while 50% of ARC locations would
have to review seven or fewer tickets per day. Moreover, by
reviewing and addressing any errors sooner, the transactions are
likely to be more familiar and more easily corrected if necessary
while the passenger may still be close at hand.
We would think that in a good quality-control system, travel
agents would want to know within 24 hours if there are errors in
their transactions.
TW:Will there be time to adjust
back-office technology should that prove necessary at some
agencies? What can you say about that at this stage?
Collins: Yes. We certainly plan to extend the
dialogue to the back-office technology vendors just as we are
looking to work with the travel agent community on these
issues.