Airlines Reporting Corporation

ARC AND THE TRAVEL INDUSTRY - GOING ELECTRONIC

As a result of deregulation of the airline industry in the United States and anti-trust considerations, the Airlines Reporting Corporation (ARC) was established as a close corporation in 1984. This means that it has 30 or fewer shareholders and restrictions on the transfer of its stock. Only passenger carrying, scheduled airline members of the Air Transport Association of America (ATA), that are also party to ARC’s Carrier Services Agreement, are eligible to be shareholders. There currently are thirteen shareholders. Total sales processed annually through ARC amount to approximately US$83 billion.

As successor to ATA’s Air Traffic Conference and the administrators of the Standard Ticket and Area Settlement Plan, ARC continues to service the travel industry in accordance with the structure and principals established in 1964 with the creation of the Area Settlement Plan. The purpose of ARC is to be the preferred provider of high quality, technologically advanced services related primarily to distribution and settlement of travel purchased in the U.S. on behalf of ARC’s owner airlines, participating carriers, authorized travel agencies, and customers in the most secure, cost effective, and innovative manner. ARC’s services include:

Historically, ARC traffic documents, or tickets, have been the key to establishing the relationship among carriers, travel agents, and the public. The standardized ticket has provided a simple and efficient means for agents to sell travel on all participating carriers. Beginning in early 1995, ARC began to process and settle electronic tickets issued by ARC-accredited travel agents through Computer Reservations Systems (CRSs now also knows as Global Reservations Systems or GDSs). The treatment accorded an electronic transaction by ARC is, for the most part, a mirror image of the function performed for the paper counter part with accountability residing with the electronic record of a document number rather than a numbered paper document. With the number still growing steadily, electronic tickets (or e-tickets) currently account for about half of all ARC processed travel agent transactions.

ARC’s most ambitious processing advancement has been the launch in January 1997 of IAR InteractivePlus (IAR). The rapidly growing numbers of travel agents electing to participate in IAR are able to complete their weekly sales reporting and settlement with ARC through electronic means rather than printing, mailing, and balancing a manual sales report. This electronic interaction is accomplished through links between agents, their Computer Reservation Systems (CRS) or a more recently introduced Internet link, and ARC. Nightly downloads of sales information are edited through ARC’s IAR system, credit card transactions are released for electronic billing, and the travel agent receives daily confirmations of edited sales information permitting the agent to release a fully edited sales report at the conclusion of the sales week. As agent use of the IAR system expands, significant benefits and savings are expected for agents, ARC, and participating carriers.

Whether manually ticketed, electronically ticketed, or reported through IAR, the basic ticketing principals remain the same. Each time an agent issues a ticket or electronic transaction, the name of a validating carrier is designated on the transaction. ARC’s processing centers can then identify the airline or travel agent to receive funds or commission for that ticket. Each week, all participating carriers receive one payment from ARC for all transportation sold on that carrier by every ARC agent in the United States, Puerto Rico, and the U.S. Virgin Islands. Any airline (or railroad) is eligible to use ARC’s services upon signing a Carrier Services Agreement and meeting the requirements contained therein. At the end of the second quarter of 2001, ARC had 37,317 accredited travel agency locations (travel agent retail and satellite ticket printer (STP) locations), 91 ARC accredited corporate travel departments (CTD), 134 participating air carriers, and 3 participating railroads.

At a time when competition among sellers of travel is as fiercely challenging as ever before, ARC accredited sellers of travel are seizing every opportunity to automate their business process and realizing substantial timesaving and operational efficiencies.

Travel agent input into the activities and decisions of the Corporation is provided through a number of channels. A principal one is the Advisory Counsel that is comprised of representatives of travel agent organizations and other industry advocates. The purpose of the Advisory Counsel is to gather views of those whose businesses are affected by ARC actions. The Joint Advisory Board-Agent Reporting Agreement (JAB-ARA) is another key source of input from travel agents. The JAB-ARA is composed of travel agent and airline representatives and ensures that the interested parties actively participate in the development of proposals to be presented to the ARC Board of Directors. Various subject specific airline advisory committees additionally support ARC’s Management.

Airlines and agents have total discretion to enter into sales arrangements outside of the ARC framework. The conditions for becoming an ARC agent are limited to those most directly related to ensuring that the agent is capable of meeting their obligations under the program. Beginning in early 1998, the Certified ARC Specialist (CAS), a test and certification, was first made available for agent use to further support their professional qualifications relative to ARC’s requirements. At the same time, ARC offers many substantial cost savings and efficiencies in the travel agent accreditation process and in ticket distribution, processing, and settlement. Among these is the processing of credit card transactions that are transmitted for billing on a daily basis. With the overwhelming support of the travel industry, ARC is changing the historical paradigm and is "Going Electronic" into the new millennium.

With offices in Arlington, VA, Tampa, FL, Louisville, KY, Chicago, IL, San Francisco, CA and San Juan, Puerto Rico, ARC headquarters are located at:

4100 N. Fairfax Drive, Suite 600
Arlington, VA 22203-1629 USA

Please see our Departments, Programs and Services page if you would like to know more or contact ARC Corporate Communications Tel: +1 703-816-8525, Fax: +1 703-816-8168 or e-mail to: corpcom@arlington.arccorp.com.

The ARC home page may be found at: www.arccorp.com.

AIRLINES REPORTING CORPORATION
4100 N. Fairfax Drive, Suite 600
Arlington, VA 22203-1629



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