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| Q: |
What is the ARC Annual Administrative Fee? |
| A: |
The Annual Administrative Fee has two components: a fixed portion, billed each January to every ARC number listed in our system, and a transactional component based on the volume processed by ARC each quarter. The fixed-fee portion differs based on the type of location associated with the ARC number, e.g. a branch, home office, STP, etc. The fee covers your location’s share of the operating costs for the Area Settlement Plan, as well as of the Travel Agent Arbiter Program. It is essentially your membership fee. |
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| Q: |
Why is ARC increasing my fee in 2008? Why have there only been small increases from year to year up until now? |
| A: |
From 2001-2007 the fixed-portion of the fee has ranged from $120.00-145.00. ARC’s costs for settlement have been fairly flat during that time frame due to savings from cost-reductions in hardware & technologies and the elimination of paper. Those factors allowed us to maintain small yearly increases. There was a dramatic decline in the base of locations against which ARC assessed these fees during those seven years, yet we maintained the fee at a flat level. Additionally, ARC continued to deliver quality products to market during this time frame without increasing fees.
Moving forward, increased costs due to added functionality, enhancements to existing products and investments in Web-enabling applications and encryption, as well as PCI compliance bring benefits to our customers. As ARC is changing to “run like a business”, its products & services must be priced competitively based on the value they provide to the marketplace. Numerous opportunities for cost savings are available through the integration of ARC tools into your business model.
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| Q: |
What amount is ARC proposing to charge in 2008? |
| A: |
| Independent* or Home Office |
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$395.00 |
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| Branch or STP |
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$150.00 |
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| Variable Transaction Fee |
.020 |
> than 1,000 |
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| Quarterly Ceiling for Transaction Fee |
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1,875,000 transactions |
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| Agents issuing 1,000 transactions or less are not subject to a transaction fee. 80% of ARC accredited agents fall into this category. There are fewer than 10 agencies that meet the transaction ceiling. ARC introduced a transaction fee element as the number of locations fell from 45,000+ to 20,000 or so today. |
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| Q: |
What benefits do I receive from ARC? |
| A: |
- Rights to access and ticket carrier content
- Authorized to book and ticket on airlines
- Access to critical business processes like IAR & DRS
- Provides secure, efficient settlement of air sales
- Industry recognition that your organization is qualified and credible to do business with
- Eases your selling & purchasing efforts
- Provides a standard identity for commission payments
- Additionally, ARC strives to provide value added services that will assist you with limitless revenue generation such as Travel Agency Service Fee, ARC MarketPlace and the soon to be launched ARC TravelCard. ARC provides security via PCI compliance and affords the agency marketplace with efficiencies as well as cost and time savings via the core settlement services such as IAR, DRS
- Products
- Services
- Process improvements
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| Q: |
How does the fee proposal affect my bottom line in 2008? |
| A: |
Average Independent Location: For the average agent (80% of the agency population issuing 1,000 transactions or less), this is essentially an extra $20.00 per month. That is not a huge increase. It is in line with normal operational increases like rent, utilities etc.*
Agent with Five Branches: If they have 100,000 transactions annually, this would put them in the top tier of agents by volume. There would be a $300.00 increase in the transaction fee in 2008. There would be an increase of $250.00 in the HOL fee and a $25.00 increase in the branch fee which is going up to $5.00 /branch. Their total fee in 2007 is $2,579 and would increase to $3,145 in 2008. A significant increase, yes, but not overwhelming.
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| Q: |
What changes did ARC make to its 2008 fee proposal as a result of its consultation with the agency community? |
| A: |
Based on feedback from agents regarding challenges they encounter with ARC, we incorporated the elimination of fees associated with Agency training and miscellaneous accreditation changes into the fee proposal. Training would now be included as part of an agent’s general ARC accreditation.
| ARC Specialist Training Fees |
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Current 2007 |
Proposed 2008 |
| Test only – online or classroom |
$225 |
$0.00 |
| Training & testing online |
$425 |
$0.00 |
| Classroom training and testing (Arlington) |
$525 |
$0.00 |
| Classroom training and testing (San Juan) |
$375 |
$0.00 |
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| ARC Miscellaneous Accreditation Fees |
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Current 2007 |
Proposed 2008 |
| Change of Bank Account |
$25 |
$0.00 |
| Reclassification of Agency Status |
$175 |
$0.00 |
| Change of Location |
$175 |
$0.00 |
| Redesignation of Office Type |
$125 |
$0.00 |
| Change of DBA Name |
$125 |
$0.00 |
| Change of legal Name |
$125 |
$0.00 |
| Redesignation of STP Host |
$125 |
$0.00 |
| Redesignation of owners (< 30%) |
$125 |
$0.00 |
| Voluntary Deletion |
$25 |
$0.00 |
Additionally ARC committed to a complete review of the Agent Reporting Agreement (ARA) to eliminate outdated requirements
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| Q: |
Why does the increase proposed for 2008 seem so high? |
| A: |
With respect to the level of the proposed increase ARC acknowledges it is sizable; however, we respectfully note the extremely modest increases since 1985 while continuing to increase the offerings of the settlement plan. For the majority of agents the increase boils down to $20.00 a month. |
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| Q: |
What if this fee increase will propose a hardship for me? |
| A: |
We recommend that you take advantage of ARC’s new accreditation designation; Verified Travel Consultant (VTC). This is a new level of accreditation that allows agents that no longer do air to keep their ARC identity interaction with other travel related suppliers. For more information on the VTC program go to http://www.arccorp.com/join/join_arc_VTC.html |
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| Q: |
What does my annual fee cover? |
| A: |
The annual fee covers the cost of access to all core settlement services, and access to the arbitration services of the Travel Agent Arbiter. Examples of core settlement services are IAR, DRS, Memo Manager, ISS, and ARC’s Customer Support Center. |
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| Q: |
What does my annual fee not cover? |
| A: |
The annual fee does not cover access to value added services such as the upcoming Stored Value Card and Travel Agency Service Fee/Agent’s Choice, although the sale and reporting of these products is consolidated into ARC’s core operations for greater efficiency. |
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| Q: |
Will the ARC fee increase in the future? |
| A: |
The current proposal is for 2008. ARC has to look at the value it provides to the marketplace and evaluate the following:
- The past commitments to delivering products and services required monetary and resource investments
- Moving forward, investments have to be shared among all players
- The dynamics of doing business with ARC are different
- We believe it will take all of us to be successful
- We have proven ourselves as far as benefiting your business models with our past demonstrated commitment to investments
- Future commitment - Adding new services and value to sustain and enhance every distribution segment is expected
- Emphasis on customer-focus initiatives
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| * ARC will split the collection of the fixed fee portion of the annual fee to ARC-accredited independent locations (ARC-accredited locations without associated branches or STPs) collecting $150 in January 2008 and the remaining balance in July, 2008. |
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