ARC & APG A Winning Combination Keeping you on the Cutting Edge of Distribution
Mark Meader Vice President, Business Development | ARC
ARC – WHO WE ARE AND WHAT WE DO We are: • Airline owned • Headquartered in Arlington, VA, USA with offices in Louisville, Kentucky; Tampa, Florida; and, San Juan, Puerto Rico • 390 Employees (approx.)
We provide: • Accreditation, settlement services and data products in the United States, Puerto Rico, the U.S. Virgin Islands and American Samoa – IATA performs these duties in the rest of the world
Our Customers: • Airlines, travel agencies, others (e.g., financial services and investment firms, airports, hotels, destination and tourism organizations, etc.)
ARC BY THE NUMBERS - 2011 • $68.8 billion in airline transactions processed (up from $65 billion in 2010) • Excludes $12.3 billion in taxes and fees • Estimated 53% of all U.S. passengers (excluding Southwest Airlines)
• 143 million transactions (tickets) (down from 145 million in 2010)
• 2.8billion air flight segments in ARC COMPASS® • 14,000 accredited points of sale (down from 14,800 in 2010) • VTCs up 10% to 1,470 from 1,243
• 193 participating carriers (up from 192 in 2010)
2012 SO FAR (THROUGH AUGUST) •
$48.7 billion in airline sales (+1.13% vs. 2011) Excludes $10.5 billion in taxes and fees
•
100.5 million tickets (+0.22% vs. 2011)
•
13,731 retail locations (vs. 14,052 – Dec. 2011) 1,538 VTC locations (vs. 1,470 – Dec. 2011) 528 STP locations (-69 vs. 2011)
•
193 participating carriers (no change from 2011)
IT’S ALSO IMPORTANT TO REMEMBER THAT… • ARC accredited travel agencies facilitate CASH sales • There are no credit card interchange/merchant fees on cash!
$8,184,720,891
in cash sales in 2011
• Up 8.72% over 2010 • No cash sales on airline websites • At 2.5% interchange rate, the ARC agency channel saved the airline industry over $200 million* last year! *Assuming a hypothetical 2.5% interchange rate
Source: ARC COMPASS速, ASP data Mega Other July 2012
May 2012
March 2012
January 2012
November 2011
September 2011
July 2011
May 2011
March 2011
January 2011
November 2010
September 2010
July 2010
May 2010
March 2010
January 2010
November 2009
September 2009
July 2009
May 2009
$900
March 2009
January 2009
November 2008
September 2008
July 2008
May 2008
March 2008
January 2008
AGENCIES CONSISTENTLY DRIVE HIGHER AVERAGE FARES Agency average fares are higher than OTA/airline.com fares $800
Average Fare by Agency Type
$700
$600
$500
$400
$300
$200
$100
$-
Month of Issue
OTA
Assumption: Airline.com fares are roughly equal to OTA fares
January 2008 March 2008 May 2008 July 2008 September 2008 November 2008 January 2009 March 2009 May 2009 July 2009 September 2009 November 2009 January 2010 March 2010 May 2010 July 2010 September 2010 November 2010 January 2011 March 2011 May 2011 July 2011 September 2011 November 2011 January 2012 March 2012 May 2012 July 2012
Millions
AGENCIES CONSISTENTLY DRIVE HIGHER SHARE OF VOLUMES Agency volumes are higher than airline.com/OTA volumes Air Sales Volume by Agency Type
$3 500
$3 000
$2 500
$2 000
$1 500
$1 000
$500
$-
Mega
Source: ARC COMPASS速, ASP data Other OTA
Assumption: Airline.com share is roughly equal to OTA share
CARRIER PARTICIPATION IN ARC ARC offers three carrier participation options 1.
2.
3.
Transaction Only – for carriers with low monthly transactions, this option gives access to the ARC network and benefits, while offering a “pay-as-you-go” fee structure; it allows you to leverage low startup fees to help seek new revenue opportunities Associate Carrier – when our Full Carrier program is not costproportionate to anticipated US transaction volumes, this option is designed to grow volume and increase cash flow with a low monthly rate to keep fixed costs down Full Carrier – our traditional carrier participation program, designed for carriers with large transaction volumes, providing the lowest cost per transaction and allowing carriers to meet the demands that come with such large transaction numbers
ARC AND APG WORKING TOGETHER • If you’re not a part of ARC, you should be! • APG and ARC have a well established Sales and Marketing agreement giving airlines easy access to the US Travel Agency distribution channel • The ARC / APG partnership provides airlines with a costeffective means of establishing a market presence in the United States
THE SECRET OF THE AGENT IS OUT A renewed agency focus • Forbes: “Why you need a travel agent” • CNN: “Travel Agents Know Something You Don’t”
Agency Value: • Expertise • • • •
Depth of knowledge Connections Improved quality of travel experience Relationship-building
AGENCY VALUE PROPOSITION • Agents = Partners • Travel agents are key partners to airlines giving access to high yield fares including corporate and business travel • Travel agents are able to connect with corporate booking tools and provide support services • Airlines having to suddenly provide support services and connect with all corporate booking tools would mean a significant increase in costs
• Consumers desire professional guidance • High yield travel, especially high-end travel and cruises see the need for travel professionals • Travel agents provide information, guidance, support, research and other functions that a large number of consumers value • Are carriers willing and able to provide?
AGENCY VALUE PROPOSITION - CONTINUED… • Complex trips require detailed industry knowledge • Travel agents fulfill this role • Consumer trends indicate assistance required during trip in case of cancellations and other issues • Professional travel agents have relationships with hotels, car rental companies, cruise lines, insurance providers, tour operators, etc. – Can often make arrangements not available on-line
• Travel agents arrange for sporting events, theater, restaurants, etc. all on a moment’s notice – Carriers are not geared or staffed for this role
• Airlines desire direct access to their customers • Hotels, car rental companies, tour operators, restaurants, etc. desire same • However, customers cannot easily establish relationships and work directly with multiple airlines, hotels, car rental firms, etc.
• Travel agents provide the conduit!
IN CLOSING: ARC AND APG – A WINNING COMBINATION • Don’t miss out on the opportunities to be gained from the US market • Stay on the cutting edge of distribution • Take advantage of the ARC / APG partnership to provide you with a cost-effective means of establishing a market presence in the United States • Carriers need to accept – Agents are not going away – agent share solid at 50% - Agents are incredibly adaptive – Customers always have and always will seek advice on travel – especially some of their best customers
ARC & APG A Winning Combination Thank you!