Over the past 30 years, Columbus, Ohio-based Automated Commission Technologies (ACT) has helped travel agencies uncover tens of millions of dollars in commission errors pending an ARC dispute, according to company owner Bill Roebuck.
But when Covid-19 destroyed the travel industry last spring, Roebuck wondered if it was time to close the store. ACT survived after airlines waived most of their commissions in the early 2000s, but only after it shrank to 11 people.
By 2020, its staff has grown again to four people, and its income is higher than ever. But the pandemic has cut ACT volume by 80%, Roebuck said, and halved the client list from 70.
“It was a tough choice,” Roebuck said. “I could fold our tent. I was 65 years old. We had a good 2019. I could take what I did, which was generous, and retire. “
Instead, with the support of the staff, Roebuck decided to continue. He kept his staff intact with PPP and Small Business Administration loans, giving up his own paycheck and cutting employee hours.
ACT, meanwhile, has used the downtime to improve its AirComm software and develop a new web application that, once completed, will allow agencies to automate the accounting adjustments they must make after AirComm detects commission errors.
Now that the travel business is picking up steam again, Roebuck is optimistic about the industry and the outlook for ACT. With the downsizing of staff in many travel agencies, he foresees a growing need for companies to use a system like AirComm.
“A lot of talented people who really understood what commission was, were fired,” Roebuck said.
The premise of the AirComm software system is relatively simple. Each day, the ACT team downloads the full ARC passenger registration (PNR) database for the previous day and then processes it through AirComm software for analysis. The software matches PNRs with ACT customer airlines’ commission agreements and then notes when the commission is too low and when overpayment has been made.
The client agencies then review AirComm’s findings and, if they agree, the ACT team changes the entry in the ARC settlement system. All records must be changed within 24 hours.
Roebuck estimates a 5% error rate among his clients, with most of the errors being underpayment and many of the mistakes made by agencies. But some errors are overpayments, and changing them also helps agencies as it prevents subsequent debit memos.
Roebuck explained that in general, airline commission formulas have become more complex in recent years, mainly due to proportional allocation. Previously, airlines tended to pay commissions only for departures or for outbound routes, with the lesser of those applied. However, agencies can now charge two commissions per ticket, receiving the corresponding commission from both sides.
Mohammed Ali, corporate manager of TravelStore, a Los Angeles-based agency that is a client of ACT, agrees that the pro-rata has made it more difficult to negotiate commissions, among other things. He said a hefty 40% of TravelStore’s PNRs change after AirComm’s processing due to commission errors.
He added that the savings could be significant. For example, Ali said that TravelStore recently issued four international tickets. When these PNRs were processed through AirComm the next day, a fee of $ 753 was found to be underpaid.
Peter Vlitas, senior vice president of airline relations for Internova Travel Group, another ACT client, also praised AirComm’s service.
“Now, more than ever, there is definitely a return on investment because every penny counts,” he said. “This is a great audit tool. And look at the situation: everybody fires people, so you don’t have many eyes. “
Roebuck says his AirComm system is the last chance for agencies to charge commissions.
“Once the 24-hour ARC edit window closes, there will be no recourse,” he explained.
He said that during the pandemic, ACT has improved the tools the company uses to integrate airline / agency commission agreements into software. Meanwhile, the upcoming harmonization opportunity between AirComm and back office systems will make product use more efficient than ever.
“Thanks to our improvements in automation, we are able to support small travel agencies where [before] it really wasn’t cost effective, ”he said.
In terms of commission rates, Roebuck said they have remained stable in the “big three” US airlines. He predicted that as long-distance international shipping begins to open up, carriers may even tactically raise commissions on key routes within months as they compete to get the business back.