United Airlines has implemented several policies that in
aggregate are saving travel agencies close to $5 million a year on debit memos,
according to the carrier.
That reduction comes as ARC's Debit Memo Working Group
continues efforts to reduce the volume of debit memos agents receive.
"We don't like issuing debit memos as much as the
agencies don't enjoy receiving them," said Brian Miller, United's senior
manager of sales communications and policies. "But we have the resources,
the relationships, the intelligence now to make some informed decisions in
policy changes that can help us really make a significant change in this space.
We want to be an industry leader in coming out and saying, 'You know what? Let's
try to the extent possible to eliminate debit memos.'"
One of the ways United is working toward that goal is by
participating in the Working Group, according to Craig Miller, director of
revenue accounting. (He is no relation to Brian Miller.) Among members of the
Working Group, which began meeting in 2013, are representatives of carriers,
agencies, IATA, ASTA, GDSs and the Airline Tariff Publishing Co.
Shelly Younger, ARC's settlement services manager, said the
Working Group's focus is currently twofold: creating standard debit memo reason
codes and establishing best practices "applicable to all phases of the
debit memo process."
The Working Group has also created a subgroup to address
various issues arising within the fare-filing process. It is set to begin work
in a few weeks.
Debit memos have long been a major source of friction
between agents and airlines. But according to Younger, the various carriers
involved in the Working Group are willing and ready to work to reduce debit
memos. For example, Delta Air Lines suggested creating the fare-filing subgroup
to address those issues.
Younger called United's efforts "the
gold standard" when it comes to carriers attempting to reduce the number
of debit memos.
In addition to participating in the Working Group, Craig
Miller said, United has taken several initiatives aimed at reducing debit memos
that, on an annualized basis, have resulted in a reduction of some $4.73
"The first thing we have to recognize is that the
travel agency [channel] does a great job in issuing tickets," he said. "When
we looked at our 3 million transactions a month, on average, the accuracy rate
that we're seeing tickets being issued by the travel agency group is at 99.7%,
so we applaud and commend the travel agency community for issuing tickets accurately."
Debit memos, however, result from that remaining 0.3%.
To help reduce them, he said United first reviewed policies
and procedures to identify best practices. In doing so, the carrier reduced the
manpower necessary to produce debit memos by about 20%, and passed that savings
along to agents by reducing its debit memo administrative fee from $50 to $40.
In the period of about a year, that move has saved the agency community about
ARC's Shelly Younger called United's efforts "the gold standard" when it comes to carriers attempting to reduce the number of debit memos.
United has also taken several steps surrounding credit card
chargebacks. First, when it comes to no-show passengers resulting in
chargebacks, United previously wrote debit memos for the full value of the
ticket. Now, the carrier has created a sliding scale based on the actual cost
of no-show passengers.
While the least expensive tickets will likely result in a
debit memo for the full cost of the ticket, debit memos written for more
expensive air tickets are being issued at a reduced cost, Craig Miller said. On
an annual basis, that change has saved agents about $1.4 million.
The carrier is also working with credit card companies --
first Visa, now American Express -- to fight false chargebacks in cases where
the client actually did fly. The carrier provides the flight manifest to the
credit card company, which can overturn the chargeback. From January through
September, he said, this change saved agencies about $1.5 million.
In addition to those policy changes, United has taken
several other steps. It does not issue debit memos in instances where agents
have used incorrect waiver codes when handling tickets during involuntary
situations, such as storms or strikes.
This has saved the agency channel about $1.1 million
annually, United said.
The airline has also relaxed its policy on writing debit
memos for class-of-service policy infringements during irregular operations.
Craig Miller said this has resulted in annual savings of about $306,000.
"Sales can step in and be good partners with their
travel agencies, and they can waive some debit memos if they want," he
said, adding that sales waivers have resulted in about $315,000 in annual savings.
"We want [the sales team] to be able to focus on the
relationship and take the opportunity sometimes to step into the debit memo
process and waive it or reduce it," Brian Miller said. "What it comes
down to at the end of it is the ability for sales, the customer and revenue
accounting to work collaboratively on a solution. That's really our ultimate
Other carriers, including Delta, are also working to reduce
debit memos. Though Delta declined to elaborate on its efforts for this report,
the airline said in a statement that it had reduced its volume of debit memos
by half, adding, "While this is a huge win for our valued [travel agent]
partners, we will continue to look for innovative ways to reduce debit memo
volume with their input."
While carriers work to reduce the number of debit memos they
issue, ARC's Younger had several pieces of advice for agents as well.
First, she said, agents should consider using automation
tools that GDSs make available. For example, there are tools available that
automate refunds, which can help eliminate human error that can result in debit
Second, she urged education, arguing that what was needed
was "some training internally -- especially those larger agencies that
have a lot of turnover in their ticket agents. It's a struggle for them to keep
up with training, but I think some targeted training based on the debit memos
that they're getting would go a long way to help reduce debit memos."