In the mid-1990s, agent Fred Munroe managed an agency that was
accredited by the Airlines Reporting Corp. to sell air tickets.
But when air commissions began to disappear, the agency dropped
its GDS contract, and Munroe was forced to find a host agency to
handle his ticketing needs, for a split commission.
Now Munroe has found another way to sell air tickets, book
cruises and tours without having his own GDS contract or sharing
commissions: Magellan 360, an “alternative” business model that
allows agents access to the major GDS systems without establishing
their own ARC-accredited retail location.
Magellan is just one of several alternative systems that have
emerged in what some in the industry are calling the wave of the
future for small agencies and independent agents.
The trend has helped send the number of ARC-accredited retail
locations plummeting by more than 25 percent over the past five
years, according to ARC statistics.
ARC-authorized retail locations reached a high of 33,500 in
1997, but then began a steady decline as airline commissions began
to disappear, ARC figures show. By the end of 2002, there were just
24,679 ARC-accredited retail locations.
Exact reasons for the steady decline are unclear; ARC does not
track reasons for the drop.
Industry experts say several factors appear to be at work,
including a general travel agency consolidation that has lead to
some agencies simply closing their doors.
More agents are also simply buying air tickets through
consolidators, directly on the Internet, through host agencies or,
like Munroe, using companies such as Magellan 360, which shares
access to an ARC number and began offering ticketing services about
a year ago.
Magellan has about 300 agents and agencies, but the board of
directors for the Association of Retail Travel Agents last week
approved a contract with Magellan that would make it available to
ARTA’s 3,000 members.
Last week, details of the contract had not been finalized, but
John Hawks, ARTA president, said, “Any agency that does less than
$2 million in air would be crazy not to look at this sort of
arrangement.”
From ARC’s standpoint, Magellan is one authorized location. But
potentially, thousands of agents could buy all the products
available on GDS systems through that one location, which offers
the benefits of buying in aggregate.
Magellan offers agents access to the four major GDS systems, and
it also handles the back-office paperwork of processing tickets and
reporting the sale to ARC.
Agents can sell tickets without carrying the burden of the bonds
required to become an ARC-accredited location, the fees of having a
GDS contract, buying ticket stock and the time-consuming process of
filing ARC reports.
At Magellan, there’s a per-invoice fee that varies, depending on
monthly volume. “I now see between 30 to 40 percent more in
commissions,” said Munroe, an independent whose Grover Beach,
Calif. agency is called Travel With Fred. “And I can track every
invoice I’ve written since Day One.”
But companies like Magellan are designed for agents who don’t
need the hand-holding that a host agency might offer. And tickets
are printed in Chicago, so, at best, Munroe doesn’t have the ticket
in hand until the next day.
Magellan is the relative newcomer on the block. Nexion
(www.nexionnet. com) has been offering such alternative GDS
services for about four years and now claims about 1,000
agents.
Like Magellan, Nexion offers GDS access and ARC reporting
services. But Nexion offers access to the four major GDS systems at
once, translating commands from one system to another.
Nexion offers five pricing plans with varying combinations of
monthly fees and commission splits.
Another option for agents is the Independent Travel Agency
Support Network, or iTASN, (www.itasn.com) a group of about 220
mostly brick-and-mortar agents who do ticketing under one ARC
number to leverage booking volume and lower costs. With iTASN,
agents have access to Sabre only.
There’s an annual fee and small monthly fees, but agents get
paid 50 cents per segment. Agents also keep 100 percent of
commission claimed at ticketing, and 50 to 60 percent of back-end
commissions, said manager Alan Kawadler, who predicts that such
services will catch on.
Said Kawadler: “If we could look in a crystal ball and predict
the future, I predict we will have the top 100 agencies selling air
tickets, and groups like ours supporting the small agencies.”
