A victory (of sorts) in the travel agent/airline wars

Travel-Agency.jpg

At last, a win for the travel agents. Sort of. It may not be David versus Goliath as much as Goliath versus Behemoth, but a victory of sorts. The agents were facing increases of as much as four times for fees charged by payment clearinghouse ARC, or Airlines Reporting Corp. ARC, which is owned by the airlines, proposed raising the annual administrative charge from $145 to $395 for agencies with a single locations or for a headquarters; fees for branches would go up less, from $145 to $150, while the transaction fee would increase from 1.7 cents to 2 cents. The agents, already hit by airline commission cuts, protested, and took their case to an independent arbitration panel, which settles disputes between ARC and agents.

The panel waited until just about the last minute before the July 24 fee hike, ruling just days before the deadline that the new fees did not “represent a fair allocation of costs between carrier and agents.” The new scheme, it held, “represents a shifting of ARC’s cost burden from the carriers to the travel agents without any proven benefit.”

The president of the travel agent trade group, Cheryl Hudak of ASTA (American Society of Travel Agents), claimed a David vs. Goliath victory. But the battle was not waged by little mom-and-pop agencies – if there are any of those anymore. The fight against ARC was waged by Carlson (CWT), Uniglobe, and some other big guys, who provided expert witnesses.

Although the arbitrator’s decision applies only to 2008, it is unlikely that ARC will keep it in place for the next few years. But it’s also unlikely that agents will have to pay drastically less. As ARC’s chief executive, David Collins, said, “in light of the economic environment that airlines in particular face, this decision is even more impactful.”

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