Building the Future of Settlement

Building the Future of Settlement

ARC's Lucianne Leighton announced ARC is open for NDC business and provided an update on its Settlement Council.

For more than 50 years, ARC has been a trusted provider of settlement services for the air travel industry and during a general session on Friday at ARC TravelConnect, managing director of business process management and settlement services, Lucianne Leighton, spoke with the audience about the current state of ARC's settlement platform, the role ARC plays in bringing the air distribution community together and what the future may hold.

In 2016, ARC continued to support airlines' indirect distribution strategies and help travel agencies better serve their customers. Last year, ARC:

  • Managed 12,000 travel agency locations
  • Processed 150 million transactions
  • Settled $80 billion in airline sales
  • Processed $9 billion in cash sales
  • Reduced losses to less than $700,000
  • Processed $1.1 billion in service fees

Today's distribution landscape is a fluid environment with disruption seemingly around every corner. As airlines pursue divergent strategies to deliver richer merchandising and dynamic, traveler-centric content, it's critical for the industry to come together and create flexible, dependable and cost-effective models and systems that not only enhance business outcomes, but also improve the traveler experience.

This is why, in early 2017, ARC launched its Settlement Council, a group of senior industry executives representing the full spectrum of airline distribution, including the airlines themselves, travel agencies, GDSs and others. ARC wanted to improve its understanding of what both airlines and agencies need, so that it can better support the changing distribution environment and the varying and emerging distribution models. It wanted to hear not only from the airlines about what their distribution strategies will be, but also to ensure that agencies had a seat at the table and a voice in the discussion. At the end of the day, Leighton pointed out, "One size does not fit all."

The Council set a range of priorities across both transaction management and relationship management.

For transaction management, the Council identified five key priorities:

  • NDC Implementation capabilities across both the short- and long-term
  • Enhancing Interactive Agent Reporting (IAR)
  • New capabilities in transaction processing
  • Full Electronic Miscellaneous Document (EMD) functionality
  • Improved accuracy and information in support of revenue accounting

In regards to relationship management, the Council wanted to obtain better information about business partners and an improved onboarding and ongoing participation experience.

According to Leighton, what came out of these in-depth discussions were two-fold: Short-term enhancements to ARC systems and long-term advancements to functionality and capabilities that support distribution models across a range of strategies, whether direct or indirect.

In the near-term, ARC's settlement roadmap will:

  • Enhance Memo Manager through memo reason standardization and mapping
  • Enhance Interactive Agent Reporting (IAR), including multi-HOL single sign-on, full EMD functionality, API interfaces, multiple forms of payment, auto-link residual value EMD to an exchange and enhancements to list functionality
  • Support changes in distribution

In the long-term, ARC will take the necessary steps to deliver:

  • Support for a wide spectrum of airline distribution strategies
  • Flexible, secure and cost-effective products, tools and services
  • A continued focus on innovation in participation, accreditation, risk management and fraud prevention

ARC Enhanced Distribution

Leighton's major announcement was that ARC is developing enhanced distribution functionality. In other words, "ARC is open for NDC business," and is working to create functionality to fully support airlines' NDC strategies, including:

  • Accepting carrier or neutral ticket stock
  • Accepting SPRF or RET files
  • The option to inhibit credit card billing or have ARC continue to bill
  • The option to prevent error corrections or modifications
  • Identifying transactions as "NDC" in IAR

Leighton encouraged airlines to contact ARC about their NDC strategies and begin the implementation process. To agencies, she added, "We want to talk to you about how NDC will impact your operations… ARC wants to ensure that NDC implementations are a win-win for all parties involved."

According to Leighton, next steps will be to address technology modernization at ARC, which will need to support both the current settlement process, as well as enhanced distribution strategies.

"We bring people together to solve problems."

Leighton then addressed what will come next for the Settlement Council: Smaller teams to focus on more long-term projects, including NDC pilot programs and onboarding, expediting exchanges, commission editing and a path to eliminating Miscellaneous Charge Orders (MCOs) and other similar issues.

In a poignant statement early in her presentation, Leighton made the point that these are not enhancements and advancements for the sole sake of implementing new technology, but to support strategic business decisions. "NDC is a technology standard, but it's not what's causing the market to change," Leighton emphasized. "The airlines' evolving distribution strategies are driving the adoption of new technology and new standards."

Most importantly, ARC seeks to better support its customers, so that airlines and travel agencies can better serve the traveler both now and in the future. "We have to be really good at providing a variety of different support solutions," Leighton said, adding, "No matter how perfect your NDC implementation is, if it's not transparent to the traveler, then it can't be considered a success."

In closing, Leighton highlighted that ARC will continue to function as a unifying leader in the air travel industry. "We bring people together to solve problems."

To learn more about ARC Enhanced Distribution, visit our new distribution page.

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About the author

Peter Kane is a senior manager of marketing programs at ARC. A resident of Portland, Oregon, Peter is a passionate Manchester United fan and enjoys hiking in the Pacific Northwest during his free time.