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ARC/CTD State of the Union

ARC/CTD State of the Union . Michael Premo President & CEO ARC. We Are. An airline-owned travel industry solution provider Incorporated in 1984 as a Delaware corporation

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ARC/CTD State of the Union

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  1. ARC/CTD State of the Union Michael Premo President & CEO ARC

  2. We Are An airline-owned travel industry solution provider • Incorporated in 1984 as a Delaware corporation • Predecessor Area Settlement Plan established in 1964 • Governed by board of airlines plus the Chairman and President/CEO Headquartered in Arlington, VA; sites in Louisville, Tampa & San Juan • 394 employees Primarily, we: • Accredit travel agents in the U.S. & territories for 192 airlines and provide tools for reporting and payment on ticket sales • Provide a range of data services to customers interested in better understanding or expanding their commerce in the travel industry

  3. Topics • ARC Update • Crunching the Numbers • Debit Memo Working group • FareSight • Questions • If we have time and you are interested: • IATA NDC: Why, Oh, Why All the Hubbub?

  4. Crunching the Numbers

  5. ARC Total Transactions (Millions) 1966-2012

  6. ARC Locations 1966-2012

  7. ARC Total ($Billions) 2002-2012

  8. YTD CTD Volumes and Demographics

  9. Current CTD Listing as of SEP 2013 CTD as of 2012 • Total Locations: 148 • Independent: 119 • Homes: 8 • Branches 17 • STPs: 4 • Number of new CTDs in 2012: 5 • Number of Vol. Del. or Terminated CTDs in 2012: 9 CTD as of 2013 • Total Locations: 145 • Independent: 116 • Homes: 8 • Branches 17 • STPs: 4 • Number of new CTDs in 2013: 5 • Number of Vol. Del. or Terminated CTDs in 2013: 8

  10. ARC CTD Fee Outlook 2013 Fees • Annual Fee: $200 • Transaction fee: $0.016 • no charge < 1000 per qtr • max 2.25 million qtr • Application fee: $3,000 2014 Fees • Annual Fee: $210 • Transaction fee: $0.017 • no charge < 1000 per qtr • max 2.25 million qtr • Application fee: $3,000

  11. CTDs – Our Happiest Customers! ARC conducted its first Net Promoter Score survey in the Spring of 2013 • CTD NPS Score = 70 • (Carrier Score 36.5/Agent Score 34.1) • NOTE: A score of 50 or above is considered ‘best in class’ • Number of CTDs Represented = 46 • Total Number of Responses = 53  • Promoters = 41 • Passives = 8 • Detractors = 4

  12. Debit Memo Working Group

  13. Process Improvement Methodology:Focus on the Customer Process Evaluation Process Measurement Process Improvement

  14. Every year our industry spends at least $40 million to resolve $100 million in debit memos

  15. The DMWG has had unprecedented collaboration from across the industry

  16. Where are we now? Fares and TaxesIndustry- $15.2 million • Fare filing issues are top priority so we engaged ATPCO to conduct Fare Filing 101 course • YQ/YR needs its own subgroup! • Creating a GDS/Carrier contact list to facilitate the resolution of fare filing issues • Debit memo analysis to confirm and prioritize fare filing issues Refunds and Exchanges Industry- $11.9 million • Lack of knowledge on carrier policies are driving these memos • Created matrix that links to carrier policies (over 180 carriers) along with fare filing contact list • Evaluating if standards/consistency can be established for endorsement box verbiage on schedule changes • Setting up one-on-one conversations with carriers and agents to discuss specific issues

  17. Where are we now? CommissionsIndustry- $15.6 million • Root causes for commission memos are contract violations, recall commissions, and incorrect commissions • Identifying commonalities to drive best practices for negotiated rates • Creating best practices and training for common mistakes Chargebacks Industry- $19.2 million • Goals are travel agent education, card company engagement, and best practices • Working Visa on critical issues for preventing chargebacks • Providing best practice webinars to travel agencies

  18. Where are we now? ARC Memo Manager • AMM has had multiple maintenance releases during 2013 to add functionality requested by customers: July 2013: • Add a link to access carrier policies • Add agency name to Memo Details screen • Include dispute date in export • Add GDS grant access date to export • Additional AMM releases planned over the next 6-9 months:

  19. What is next? • Held our second Face-to-Face meeting on September 11 and confirmed the following: • All participants see value in our efforts and want to continue with most of subgroups with the possibility of adding additional groups • Standardizing debit memo codes is a top priority. A sub group to address this will be formed in the next 90 days. • Enhancing AMM to add more functionality for GDS is another priority and ARC is meeting with GDSs to confirm the priority of proposed enhancements • Establish Communications and Education subgroups

  20. FareSight

  21. FareSight • Business intelligence tool targeted at corporate travel managers (CTMs) • Use ARC data to optimize CTMs’ corporate travel programs • Assess purchasing effectiveness • Assess policy effectiveness • Agreement threshold monitoring • Speedy insights and baseline, not against one agency’s customers but the whole agency market

  22. Major ARC Work Activity – 2013/2014/2015 • Revised ARA implementation – July 1, 2013 • Debit Memo Working Group – launched Jan. 2013 • IATA – ARC settlement benchmarking • Engagement on IATA New Distribution Capability • Ensure use of ARC ticket stock when U.S. agents sell in NDC • Replacement of core settlement systems • Five-year project awaiting ARC Board approval • Compete in data products • Explore airline-agency merchandising cooperation and potential for ARC

  23. Questions? Or – we can talk IATA NDC if you want….

  24. NDC

  25. What is NDC? • Source: IATA NDC is an IATA-led collaborative industry initiative that: • Defines a new messaging standard between airlines and agents • Enables greater transparency and choice for consumer in comparison shopping • And intends to close the gap between direct and indirect channels, making the indirect channel as customer-centric, retail-like as the direct channel

  26. A few key terms… • IATA’s Resolution 787 (Enhanced Airline Distribution) • Describes the main business processes required for airlines to create their own product offer within their own systems which will be provided directly by and owned by the airline • IATA XML Message Schema • IATA standard to create a Dynamic Airline Shopping engine Application Program Interface (DAS API)…based on Open Axis Schema originally created by Farelogix

  27. Airline Distribution Today GDS Availability Builds content Fare Filing Agent Customer Schedule 3rd Parties Airline • Source: IATA

  28. Airline Distribution Tomorrow? Aggregator Agent Product Price and Availability Engine Dynamic Airline Shopping Interface Customer Agent Airline • Source: IATA

  29. NDC Roadmap Learning Pilots Launches Final Pilots Review Request for Pilot Participation YE Pilots Review Industry Mass Adoption Capability Deployment Ref. Imp. v1.0 XML v5 XML v1 XML v2 XML v3 XML v4 Reso787 Reso787 v2 Reso787 v3 Risks Mockups 2013 - 2014 • Source: IATA 2015 - 2016

  30. What’s the Controversy? • IATA submits request for the resolution to be approved by DOT. • Not thinking it’s a huge deal. • Does what it does for ALL industry resolutions. • DOT says: Hmm, this looks like kind of a big deal to us. We classify as Level 3 – we want to get public comments. • All heck breaks loose. • GDSes / Business Travel Coalition even GBTA weigh in against NDC.

  31. The Arguments Against It’s the end of anonymous shopping. By collecting personal data, carriers will offer higher prices to customers they think can afford it. IATA admits the resolution is poorly worded. Make them pull it and resubmit. (And go through this all over again.

  32. The Arguments Against No No Well… It’s the end of anonymous shopping. By collecting personal data, carriers will offer higher prices to customers they think can afford it. IATA admits the resolution is poorly worded. Make them pull it and resubmit. (And go through this all over again.)

  33. The Real Arguments - Mike’s Take Agent - “I’m worried about my GDS revenue, and besides, who will pay me for this extra work?” GDS - “Airlines might not want to pay for my pricing engine” Airline – “I don’t think my product gets presented as I would like it to be” Agent – “My agents want to keep using green screen” GDS – “We can jazz up green screens if they want” Airline – “Ugh! Forget it – send them to my website!”

  34. ARC’s view • We support ANY initiative that expands content availability to agencies and CTDs • NDC? Yes! • Carrier & GDS bilateral agreements? Yes! • Direct Connect? Yes! • That said, don’t throw valuable / proven business processes out accidentally. • Especially ARC ticketing!

  35. What to Watch Out For • NDC scope creep • What beyond the XML standard will change? • NDC = do it like on the airline web-site • Does it ticket via ARC? Or via airline stock on the web-site? • Who controls the PNR? • Will my mid-office and self-book tools still work? • “Don’t worry, your GDS will do it all for you”

  36. Summary • NDC – not necessarily a bad thing • One less reason for travelers to go outside to buy • Definitely devils in the details • Ask questions and talk specifics on business process changes with everyone!

  37. More Questions? Thank you!

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