The airlines of late have toughened up their ticketing policies in a number of areas.
These policies are designed frequently to make sure that revenue collected stays that way. With yield management more of a dark science, revenue management can be just as important.
But now it is time to talk about ADM – airline-issued Agent Debit Memos.
As there are many non-agency and airline people who read these posts – I will go a little deeper into the mechanics of the process.
Airlines – have started to place increasing focus on the correct use of fares both contract and published. With fares being very complex and getting more so – the issue of a valid fare can become a very tricky thing to ensure.
The airlines have in recent time hired external parties to audit, verify or otherwise check the tickets issued. In times gone by this was done on a manual process called a ticket lift usually on a small dipstick sample size appraoch.
With almost everyone now on electronic tickets, the ability of an airline to electronically check the ticket and then reject it becomes a lot easier.
Many of these companies have become better at ensuring revenue integrity for the airlines. For example IATA favours KALE systems as a certified provider.
There is an inherent bias in the system towards airlines who are judge, jury and executioner which favours the carriers in the way fares are sold and managed.
Airlines via the BSPs (including ARC) have the ability to shoot first and discuss later. If they don’t like the way a fare is issued they don’t just collect the different – that would be too easy.
The airline in effect decides that if it doesn’t like the fare, it collects not just the difference between the airline’s in effect lowest fare and the fare charged but with the highest coach fare extant.
Thus the differential can be many times that of the fare originally issued (allegedly badly). The system also doesn’t give a lot of time for appeal.
The airline can wait for some time to issue the failure notice and then there is a short period of time before the airline collects the extra money.
Some airlines it is reported have started to systematically set the parameters for rejecting a large proportion of fares and collecting the money. Then if the agency complains they may back down.
At best the airline collects the money via the BSP and hold onto it until resolved. At worst if the agency doesn’t complain then the default is the airline winning an additional revenue that may not be correct.
The onus being on the agency to prove the airline is wrong. This amounts to a stealth form of revenue.
Even at best the airline is going to benefit from holding the money for a period of time and pocketing the interest.
Is there a resolution to this problem? Actually there is – it is the creation of a Trusted Fare.
This facility exists within several systems and the concept of trust has existed in the airline inventory distribution services for a long time.
I believe that now is the time to revisit a more generalized approach to Trusted Fares. Then fares can be issued in confidence.
At present the use of trusted fares is at a low level. The complex nature of fares means that there is a lot of time when the results are “open to interpretation”.
So what do you think?
About Timothy O'Neil-Dunne
The difference between “trusted fare” you discuss here and the GDS fare guarantees is not clear to me. Are the fare guarantees a type of trusted fare, the several systems you refer to, or something else entirely?
GDS guarantee, as I understand it, is when you allow the built in pricing system to price the itinerary and you make no subsequent modifications. Having done that the GDS will pay off your debit memos (or in most cases, point out how the airline filed the fare incorrectly and pay nothing!).
I would have thought agencies generally try to automatically quote the fare, rather than applying manual calculations or doing the entire fare construction – which is the exception rather than the rule. Thus, with the exception of consolidators with private fare contracts, I thought GDS guarantees were in the majority.
So am I reading this right or are trusted fares something completely different?
anybody knows airlines adm validity legally. i received adm after 2year of ticket issuence date and
i dont even have track to it now.
Mark that is a good question, I too have not heard of ‘Trusted Fare’ – also I should point out that the approach to auto pricing on a GDS might still be muddy, considering that an itinerary may be ‘fare quoted’ in a variety of ways depending on the options applicable at the time, e.g. if the point of sale is correct, if stopovers / connections have been identified properly, I think it is still possible to get an ADM if there are mistakes on these.
I think the majority of airline issued debit memos, are generated not from auto priced tickets, but from changes and exchanges to previously issued tickets, where fares are deemed inapplicable or somehow incorrect, and higher fares applied. Most of the times we accept their decision as the correct one, which is not necessarily the right one as we (the travel agent) have not the same power in this relationship.
hello and thanks for your comments. My remarks were addressed at the class of tickets that are created from non-published fares. As the vast majority of fares filed are now non-published this creates a significant problem if the fares are not fully “guaranteed”. Thus Cat 15,25 and 35 fares can be exempt from the usual GDS guarantee.
What I am advocating therefore is that with greater bilateralism in the market (IE direct relationships on unique fares between supplier ie airline and user ie Intermediary) then this issue is becoming increasingly important.
What I am advocating therefore is a way for the airlines (not the GDSs) to provide a guarantee process that ensures that no matter how or where the fare is sourced the airline and his partners can both be assured that the fare is good. Today such a facility does not exist and it needs to come into being.
Again thanks for your comments
Cheers
Timothy
PLz could anyone tell me in detail what is the process to dispute an ADM . when ? how ? where?
Mary
I cannot tell where you are but (country). There are different processes for the jurisdiction and even the airline. Usually these are contained in the Agent Handbook for your BSP or ARC (if you are in the USA). Sadly i have to tell you to be VERY quick about registering the dispute with both the airline and BSP. the odds are stacked against you.
Sorry I cannot provide specific advice on this topic.
Thanks
Timothy
What is the difference between a CAT 35 and CAT 25 fares?
Thanks,
Dolores: It’s my understanding that CAT 25 fares are created by airlines when they file discounts on public fares. Cat 35 fares are net fares delivered to travel agencies and corporations through the GDS.
Hi Dennis you are correct. More specifically…
Cat 25 is also known as ‘fare by rule’, so you use a rule to create a fare. This is useful to automatically keep discounts in place, rather than filing a fare that is 5% lower than say a full economy you define a rule which says there is a fare 5% lower than the full economy.
Cat 35 is used to control net fare distribution to travel consolidators, agencies and corporatesm, in the case of travel consolidators cat 35 can be used to control onward distribution to their own agency customers.
Of course, both may be combined so a discount fare could be distributed only to certain travel agencies or corporates.
Cheers
Dear Mr.Timothy,
I have now browsed almost all pages on the net on ADM’s and related to GDS guaranteed pricing.Almost taken a doctorate in this now.:)
My question to you is a $ 5000 ADM which I recieved.
A. I rebooked on a cancelled PNR not knowing that there was an airline policy on the web that rebooking not allowed.
B. If so why did not the airline inform the GDS that rebooking not allowed on the same PNR.
C. How come and why did the GDS price if the PNR was not valid as per the airline.
D.Similar fare rules I cross checke with other carriers and the information recieved from them was as long as the GDS prices and gives a new dead line the prices are guaranteed.
E.To make it more simple, the airline I used had a fare rule that ticketing has to be completed within 1day after reservation has been made.
I did this exactly as per this and got a new time limit the next day after simple repricing without any force pricing.But this particular airline had a policy which I was not aware of that the time limit clock starts the first date of the PNR was created which I find is the stupidest rule on earth.
I am fighting my best to get this cleared and hope all my other travel friends who fell in this issue be saved as I know they too have got similar amounts as ADM.
I hope I get a valid reply.
Thanks
Ronnie