The airlines of late have toughened up their ticketing policies in a number of areas.
These policies are designed frequently to make sure that revenue collected stays that way.
With Yield Management more of a dark science, Revenue Management can be just as important. In my article this week I am going to talk about ADM – Airline issued Agent Debit Memos.
As there are many non-agency and airline people who read the posts – I will go a little deeper into the mechanics of the process.
Airlines – have started to place increasing focus on the correct use of fares both contract and published. With fares being very complex and getting more so – the issue of a valid fare can become a very tricky thing to ensure.
The airlines have in recent time hired external parties to audit, verify or otherwise check the tickets issued. In times gone by this was done on a manual process called a ticket lift usually on a small dipstick sample size appraoch.
With almost everyone now on electronic tickets, the ability of an airline to electronically check the ticket and then reject it becomes a lot easier.
Many of these companies have become better at ensuring revenue integrity for the airlines. For example IATA favours KALE systems (http://www.kaleconsultants.com/index.html) as a certified provider.
There is an inherent bias in the system towards airlines who are judge, jury and executioner which favours the carriers in the way fares are sold and managed.
Airlines via the BSPs (including ARC) have the ability to shoot first and discuss later. If they don’t like the way a fare is issued they don’t just collect the different – that would be too easy.
The airline in effect decides that if it doesn’t like the fare, it collects not just the difference between the airline’s in effect lowest fare and the fare charged but with the highest coach fare extant.
Thus the differential can be many times that of the fare originally issued (allegedly badly). The system also doesn’t give a lot of time for appeal.
The airline can wait for some time to issue the failure notice and then there is a short period of time before the airline collects the extra money.
Some airlines it is reported have started to systematically set the parameters for rejecting a large proportion of fares and collecting the money. Then if the agency complains they may back down.
At best the airline collects the money via the BSP and hold onto it until resolved. At worst if the agency doesn’t complain then the default is the airline winning an additional revenue that may not be correct.
The onus being on the agency to prove the airline is wrong. This amounts to a stealth form of revenue.
Even at best the airline is going to benefit from holding the money for a period of time and pocketing the interest.
Is there a resolution to this problem? Actually there is – it is the creation of a Trusted Fare.
This facility exists within several systems and the concept of Trust has existed in the airline inventory distribution services for a long time.
I believe that now is the time to revisit a more generalized approach to Trusted Fares. Then fares can be issued in confidence.
At present the use of trusted fares is at a low level. The complex nature of fares means that there is a lot of time when the results are “open to interpretation”.
So what do you think?
The airlines of late have toughened up their ticketing policies in a number of areas.
These policies are designed frequently to make sure that revenue collected stays that way. With yield management more of a dark science, revenue management can be just as important.
But now it is time to talk about ADM – airline-issued Agent Debit Memos.
As there are many non-agency and airline people who read these posts – I will go a little deeper into the mechanics of the process.
Airlines – have started to place increasing focus on the correct use of fares both contract and published. With fares being very complex and getting more so – the issue of a valid fare can become a very tricky thing to ensure.
The airlines have in recent time hired external parties to audit, verify or otherwise check the tickets issued. In times gone by this was done on a manual process called a ticket lift usually on a small dipstick sample size appraoch.
With almost everyone now on electronic tickets, the ability of an airline to electronically check the ticket and then reject it becomes a lot easier.
Many of these companies have become better at ensuring revenue integrity for the airlines. For example IATA favours KALE systems as a certified provider.
There is an inherent bias in the system towards airlines who are judge, jury and executioner which favours the carriers in the way fares are sold and managed.
Airlines via the BSPs (including ARC) have the ability to shoot first and discuss later. If they don’t like the way a fare is issued they don’t just collect the different – that would be too easy.
The airline in effect decides that if it doesn’t like the fare, it collects not just the difference between the airline’s in effect lowest fare and the fare charged but with the highest coach fare extant.
Thus the differential can be many times that of the fare originally issued (allegedly badly). The system also doesn’t give a lot of time for appeal.
The airline can wait for some time to issue the failure notice and then there is a short period of time before the airline collects the extra money.
Some airlines it is reported have started to systematically set the parameters for rejecting a large proportion of fares and collecting the money. Then if the agency complains they may back down.
At best the airline collects the money via the BSP and hold onto it until resolved. At worst if the agency doesn’t complain then the default is the airline winning an additional revenue that may not be correct.
The onus being on the agency to prove the airline is wrong. This amounts to a stealth form of revenue.
Even at best the airline is going to benefit from holding the money for a period of time and pocketing the interest.
Is there a resolution to this problem? Actually there is – it is the creation of a Trusted Fare.
This facility exists within several systems and the concept of trust has existed in the airline inventory distribution services for a long time.
I believe that now is the time to revisit a more generalized approach to Trusted Fares. Then fares can be issued in confidence.
At present the use of trusted fares is at a low level. The complex nature of fares means that there is a lot of time when the results are “open to interpretation”.
So what do you think?