Q: My agency is hosted and one of our strategies in the pandemic environment is figuring out how to get commissions on major airline bookings. For the past 20 years or so, major US airlines have paid no commission to the typical travel agency. Still, I understand that very large, business-oriented travel agencies, like many of those on the Travel Weekly Power List, earn substantial commissions on these sales. We tried to deal directly with the airlines to get commission deals, but were rebuffed. Is there a way to get a slice of the airline commission pie?
A: There are four ways to reach your goal, and they all involve a commission-sharing agreement between your agency and a host. None involve dealing directly with the airlines.
Going from simple to complex, I call the four ways Simple Hosting, Dedicated Pseudo City Code (PCC), Dedicated ARC, and Branch.
The first method, simple hosting, is the most common: your agency signs up as an independent contractor with a host agency that has commission agreements with major airlines. You would use the host’s website to make reservations, and your reservations would appear to have been made using the host’s credentials.
You can drop your own ARC appointment, keep it inactive, or use it for non-airline bookings. If you have a GDS contract, you need to be sure that any penalty you incur for not using the system will be more than offset by the commission sharing agreement with the host.
The second method, Dedicated PCC, is for agencies with higher airline sales volumes and staff who wish to use GDS for greater efficiency. The host asks their GDS provider to provide your agency with their own PCC, which is the term providers use to refer to an agency’s location. Tickets are issued using the host’s ARC number. For GDS and airlines, your agency’s bookings are part of the host’s volume.
The third method, Dedicated ARC, is for agencies that not only have high volumes, but also want a degree of autonomy. The host provides a dedicated PCC, but also takes one of their ARC appointments and moves it to your office, or the host designates an existing ARC appointment for your exclusive use. The host is still legally responsible for your agency’s debit memos, so a host should generally have a high level of trust in your agency.
The fourth method, Branch, not only involves a dedicated CCP and ARC, but also a change of ownership subject to ARC and Iatan. The change designates your agency as a full branch of the host, so all airline commission agreements automatically cover your agency. For the provider world, you and the host are considered one entity.
Each major host usually offers one or maybe two of these configurations, and only one or two hosts offer all four.