President's Podium: More on ADM's
Dear members,
Enlightening news out of ARC following my last podium where I discussed the oursourcing of ADM collection. ARC has put together a working group that if executed effectively will see positive steps towards understanding the volume and reasoning behind the piles of debit memos circulating around our industry. I thought you would be interested in the following release. Below the release I posted some comments from members who wanted to share their personal feedback on ADM's.
ARC Release
In its continued effort to lessen the number of debit memos processed between airlines and travel agencies, the ARC-facilitated Debit Memo Working Group Steering Committee (DMWG) will focus their efforts in 2015 on standardizing the reasons under which debit memos are issued. Normalizing reasons is key in allowing a more accurate analysis of why debit memos are issued, which is currently a challenge due to the myriad of diverse reason terms used throughout the industry. The ultimate goal of this effort is the reduction of debit memos.
In 2014, nearly one-half million debit memos worth $138 million were issued. Half of those memos were related to fares, taxes or commissions. But, because these general categories did not classify a particular issue, it is virtually impossible to identify where precise action can be taken to reduce or eliminate specific debit memos. The DMWG will work this year to create two-tier reason categories to remedy this issue.
"From an agency perspective, standardizing the reasons why memos are issued will be of great value," said Shannon Keever, debit memo reconciliation manager at Altour. "Once established, it will speed up the memo resolution process as less time will be spent analyzing and requesting clarification for specific disputed memos. Knowing exactly why a debit memo was issued will also help us determine where to focus our agent training and maximize our auditing and quality control tools."
The DMWG decided to standardize reasons at their October 2014 meeting held at the ARC Travel Connect conference in Washington, D.C. At that time the DMWG felt, for example, that the category labeled "Incorrect Commission" was too broad a term. Some proposed solutions to narrow the reason were, "commission on original ticket," "commission on exchange ticket," and "commissionable-incorrect calculation." Among sub-categories suggested for commission-related reasons, "tour code/ticket designator," "routing," "class of service," and "interline." Specific terms as these will be expanded throughout the debit memo process as the year progresses.
"Delta supports the ARC DMWG as part of our commitment to build and maintain strong relationships with our travel partners," said Tim DeLaney, manager of revenue recovery at Delta Air Lines. "The DMWG is an excellent forum for open and honest communication between carriers, agencies and global distribution partners. Delta's culture supports innovative solutions and we will continue to participate in these discussions."
The DMWG is comprised of representatives from stakeholders and other interested organizations from across the industry. These include 10 airlines that issue the majority of debit memos, travel agencies ranging from sole proprietorships to mega-size, IATA, GDSs, ATPCO, and ASTA.
ACTA members chime in
Vancouver, BC
"I was just reading your article on ADM’s in the latest ACTA newsletter and wanted to throw in my two cents’ worth.
We were seeing a rise in small (under $5/ $10) debit memos from primarily smaller, cultural carriers. The amounts are small so weighing out the cost/benefit of trying to figure out what they are for and whether they are valid often falls of the side of not bothering. I just feel like they purposely send these things out to thousands of agencies knowing that the majority won’t spend the time to dispute them.
I do agree though that the outsourcing of debit memo production has turned what has always been an onerous task into an even larger pain in the bum.
I’ll try to start a little file of irritating, invalid ADM’s and perhaps if we encourage others to do the same we will be able to see some patterns and be better able to address the matter"
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Edmonton, Alberta
"What needs to happen in Canada is for BSP to take the same stance that ARC has taken and that is that they refuse to automatically debit the money from the agents account in the case of a dispute. The parties must work it out to the satisfaction of both before the monies can be debited from the agencies account. I am sure that BSP had reasons for changing their policy on this however many years ago it was, but it was not in the best interest of agents. The only party that it appeases is the airlines. If they give us a commission contract and then further decide not to honor it, they just wait for us to issue a ticket and then claw it back and refuse to recognize it and wait for the 2 week window and get their money back generally before anyone has even boarded an aircraft.
I am sure there are other airlines out there that have hired these companies that I don’t know about as I only deal with contracted airlines, but I see ridiculous ADM’s for obscure rules that the average agent would never know about and I would guess that, that is where these are coming from. What it does is causes an environment of distrust between airlines and travel agents when we are supposed to be partners, making it so that my agents don’t even want to issue tickets that they do not make any money on at all because chances are good that they are going to get hit not only with reissues that they have to do for free, but then possibly a debit memo."