WASHINGTON -- Have you heard the story about how ARC died because
travel agents were doing 100% electronic tickets and reporting
directly to their airline dealers?
A number of agents contacted by Travel Weekly gazed into their
crystal balls and predicted the slow but inexorable demise of ARC.
They felt electronic ticketing over the Internet would allow for
direct payment to suppliers, leaving no reason for an ARC.
A more tempered view came from Diane Embree, manager of All
About Travel in Northridge, Calif., who predicted more agencies
and/or consortia will have direct relationships with specific
airlines.
"ARC may not disappear," she said, "but it won't be as
significant as it is now."
ARC president David Collins has heard the stories about ARC's
demise, but he isn't dusting off his resume. In Collins'
administration, ARC has tried to forecast trends and offer new
services that make it more valuable to the industry and more viable
as a business enterprise. It has done so by utilizing the very
electronic commerce that the doomsayers see as the last nail in the
coffin.
"We've changed quite dramatically. We've gone to an electronic
system, which will allow us to be more flexible," Collins said.
Last year, ARC processed and settled $76.6 billion in sales by
43,669 retail and satellite ticket printer locations on behalf of
141 airlines, three railroads and several other diverse
suppliers.
Credit, cash, electronic, paper, on line, off line, domestic,
international, chargeback, refund, you name it: ARC pro-cessed
189,667,055 agency documents last year.
"We have great economies of scale, and we've maintained low
costs over the years," said Collins. "Our airline owners have
certainly put the pressure on us to keep our costs low."
He recalled a senior airline executive who warned him, in so
many words, that his carrier would pull out of ARC if its costs
went up.
As for the future, "those who think electronic ticketing will
make ARC obsolete fail to recognize that ARC's role is to process
transactions," he said.
Whether ARC provides a paper ticket with a serial number or a
number for an electronic ticketing record makes no difference. It's
still an agency transaction. It still has to be processed. The
credit card company still has to be billed, and the agent still has
to be paid.
Bruce Bishins, whose brainchild is Genesis, a proposed
agent-owned accreditation, reservations and settlement system,
points to a reason some people think electronic ticketing will kill
off ARC: bypass.
Bishins said airlines are using electronic ticketing to tell
travelers they don't need to go to a travel agency, thus capturing
more direct sales.
But as long as agents sell airline tickets, whether electronic
or paper, their sales must be reported, processed and settled, and
"it's probably more efficient to go through ARC," Bishins said.
ARC has been cognizant that electronic commerce can facilitate
direct reporting to individual airlines, and it launched a product
with Continental more than a year ago called direct carrier
submission. "We're talking with other carriers, and we're in the
process of expanding the product," Collins said.
Under the program, an airline collects its own data on selected
agents' direct purchases of electronic tickets and transmits the
data to ARC. In turn, ARC integrates the data into the rest of the
agent's sales data that ARC routinely gets from the agent's
CRS.
The program is a value-added service for airlines that already
have or may wish to have direct reporting relations with favored
agents. The carriers can avoid paying CRS booking fees but can use
ARC for processing and settlement at a low cost.
ARC also is making a concerted effort to diversify its supplier
participants beyond the air and rail business. Universal Studios;
Disney; Greyhound Lines; Julian Tours of Alexandria, Va.; Kemwel
Holiday Autos, and the Anheuser-Busch parks have been recruited so
far.
The diversification makes it possible for agents to use ARC
documents to sell products beyond air and rail, take the commission
up front and report the sales on their weekly ARC reports.
Collins said ARC wants to "help travel agents sell a wider range
of products." But diversification also makes ARC bigger and
enhances its economies of scale, another way to hold down costs and
sustain itself in the new century. ARC also is thinking about
expanding outside the 50 states by contracting with IATA to take
over sales settlement functions for agents in foreign
countries.
The goodies that ARC brings to the table are lower costs than
IATA's and the ability to offer electronic reporting. The first
sign of broadening hegemony took place in 1999 when ARC assumed the
accreditation, processing and settlement functions of an IATA
subsidiary handling some 600 agents in Puerto Rico and the U.S.
Virgin Islands.
"We integrated them into our system and brought them our
benefits. We brought them electronic ticketing, for example, which
was good because some of the agents were beginning to lose clients
[without it]," Collins said. "We brought them electronic reporting.
On the day we took over, 13 of the agents went straight on
[electronic reporting]. We brought them the capability of
processing their service fees."
Noting ARC is holding more talks with IATA, he said, "We'd have
to develop a system that could handle multiple currencies" if ARC
were to integrate foreign agents in the system.
Former ASTA president Philip Davidoff of Belair/Empress Travel,
Bowie, Md., said, "ARC is in pretty good shape as long as agents
are selling tickets for more than one airline. I don't see [another
entity] in a position to process sales on all airlines in anything
approaching a profitable manner.
"Over time," Davidoff said, "ARC may change from CRS to Internet
settlement, but there still has to be a settlement mechanism."
Bishins predicted direct reporting to individual airlines by
larger agencies will be facilitated when airlines finish working
out a common set of data standards for Internet sales. But he
believes the bulk of agents still will report through ARC.
Besides, he said, "ARC is the collective enforcer -- the perfect
bad guy -- and that's a function the airlines are loath to give
up."