ARC Debit Memo Group To Focus on Standardization

ARC’s Debit Memo Working Group, a cross-industry committee that includes travel agents and representatives of airlines, GDSs, ASTA and ATPCo, will focus this year on investigating the standardization of debit memo terms and rules across travel industry sectors.

It will also consider improving training for those involved in the debit memo process.

The group, formed by ARC to stem the tide of debit memos, met in Miami last week to refine its priorities.

Speaking the same language
Doug Mangold, ARC managing director of product management, said the standardization effort involves “getting everyone to speak the same language.”

When it comes to debit memos, each carrier does things differently, Mangold said.

“Some provide more information in formats that agents can understand,” he said. “Others require some deeper digging to get a full understanding of the issue.

“We want to drive some standards into the process and get everybody talking on the same page. That will create efficiency and a lot less back-and-forth.”

Helping both agents and airlines
While agents stand to benefit from an improved system, the efficiencies would help airlines as well, according to Mangold.

The processes have been around for a long time and each airline has its own system, he said.

But until now, there was not enough information available to make a business case for change.

Reasons for debit memos
ARC’s Memo Manager gathers statistics that shed light on the issue.

In 2013 there were 472,000 debit memos issued, totaling $169 million, with an average per-memo amount of $305.

The top two reasons for debit memos, which make up 54% percent of the total amount, are commissions and fares and taxes.

Chargebacks constitute only 7% of debit memos but more than $32 million in debit memos. “It’s a small percentage but a high-dollar amount,” Mangold said.

ARC would not necessarily ask carriers to adopt a new debit memo format, he said, but they may be motivated by the data.

Making changes?
ARC can provide the airlines with benchmark information such as how quickly their debit memos are paid compared with other carriers, Mangold said.

If it’s taking a long time to get them processed, they may want to make changes.

For example, the heavily traveled New York Kennedy-London Heathrow route generates a lot of debit memos, not only because of volume but because it’s a huge business market involving lots of complex fare rules and contracts.

Mangold said an airline may want to look at the cause of its debit memos to determine whether its contracts are worded correctly and its fare and commission rules are clear.

Education and standardization
When the working group first met early last year, it prioritized commissions, fares and taxes, refunds and exchanges, and chargebacks as its main focus areas, said Mangold.

“We spent the remainder of 2013 digging into these issues and working on best practices, which we are already starting to share through programs such as our Chargeback Prevention Credit Card Acceptance and Fraud Prevention Seminars,” he said.

“Now, as we move further into 2014, we’ll turn our attention to standardization and education.”