A passenger buying an American Airlines Preferred Seat on flight 523 from Dallas/Fort Worth to El Paso, Texas, made travel tech history in the U.S.
ARC, the airline-owned airline-travel agency transaction clearinghouse in the U.S., says it processed its first Electronic Miscellaneous Document (pdf) between an airline, in this case American Airlines, and a travel agency on Aug. 25.
Here's roughly what happened: A client of a U.S. travel agency using a Farelogix desktop bought an American Airlines Preferred Seat. (The U.S. travel agency, which hasn't been identified, is not considered a mega agency.)
The travel agency and American Airlines processed the transaction through the American Airlines Direct Connect, which uses Farelogix technology instead of going through a global distribution system.
The transaction for the Preferred Seat produced an EMD (something roughly akin to an e-ticket), which for the first time gives the travel agency a standardized way to figure out what the purchase was for and how much it cost, and enables the travel agency to integrate the transaction into its accounting system.
Farelogix sends the EMD to ARC, which settles the transaction between the airline and travel agency.
The absence of a standardized way to account for ancillary services transactions has driven travel management companies crazy and the lack of implementation by airlines and GDSs has meant that they have had to carry-out one-off solutions and workarounds to get ancillary services such as checked-bags, lounge access or Wi-Fi into the hands of travel agents.
In fact, in some of these GDS workarounds, the travel agency may have been able to purchase the ancillary service for its client, but has often been unable to service the ancillary service if modifications or cancellations were required.
Lauri Reishus, ARC's vice president of operations, says EMDs are a big deal for travel agencies.
"It means we have completed our part of a very complex industry initiative to enable ancillary services to be managed through the travel agency channel," Reishus says.
Reishus says ARC has been ready to handle EMDs -- this one was of the Associated EMD type -- since November 2010.
She adds about the 18 month to two-year development process, "It's a significant enhancemement to our settlement system."
EMDs are standards created by IATA and have been long in the making and longer in the implementation.
IATA touts the benefits of EMDs here.
So while ARC made U.S. travel tech history this week, Europe and Scandinavia have been ahead of the game.
Amadeus, Finnair and travel agencies in that country were the first to handle EMDs in February 2011 and they did so through BSP (Billing and Settlement Plan), which is something akin to ARC outside the U.S.
Amadeus currently is handling airline ancillary services with EMDs for airlines and travel agencies in Demark, France, Norway and Sweden and aims to spread EMDs to 15 countries by the end of 2011, says Debra Iannaci, a spokeswoman for Amadeus.
In July, Sabre announced it had implemented EMDs with Air New Zealand for pre-paid bags and that travel agencies were testing the technology. These EMDs are not being handled by ARC.
Anyway, in the travel tech world, this may be a giant leap for airlines, travel agencies, and consumers.
Given that airlines sold $22.6 billion in ancillary services in 2010, EMDs are big business and will only accelerate airlines' merchandising efforts by getting them into the hands of travel agencies -- if that is part of the airline's distribution strategy.
American Airlines thinks this is the start of something.
"We are starting off with a trickle of volume for Preferred Seats, but will use the EMD as the basis for all of our optional services going forward in accordance with IATA standards," says Ryan Mikolasik, a spokesman for the airline. "The EMD will revolutionize the sale of optional services in the same way that the e-ticket revolutionized the sale of flight tickets."
Mikolasik says so far no GDSs have agreed to take American Airlines ancillary services and the EMDs will be the basis for them.