ARC Outlines Progress On Slaying The Debit Memo Demon

by Michele McDonald October 12, 2016

While commissions, fares and taxes continue to account for the majority of debit memos, they are not the biggest money drain for travel agents.

That dubious honor belongs to credit card chargebacks, according to Shelly Younger, the Airlines Reporting Corp.’s manager of settlement services.

At ARC’s third annual TravelConnect conference, which brings together travel agents and airlines, Younger reported enough progress on the chargeback front to cause a projected drop in the dollar value of debit memos for 2016, even though the actual number of debit memos issued remains steady.

At least part of that monetary decrease can be attributed to an initiative launched last year, in which Visa Inc. agreed to accept passenger manifests as a remedy in “friendly fraud” cases, where cardholders claim fraud for transactions in which they are involved.

Younger gave United Airlines high marks for its help in providing manifests.

Younger and her team, including ARC’s Debit Memo Working Group (DMWG), have spent the past three years slicing and dicing debit memos to root out their most common causes and find ways to prevent them. Among their notable recent achievements is the creation of ARC’s new list of standardized reason codes, which they assembled after manually sorting through thousands of debit memos and analyzing their descriptors.

Until the DMWG tackled the problem, every airline had its own definitions for what generates debit memos. The ambiguity caused a lot of pain for travel agents, who had to research debit memos with murky descriptions. So far, ARC has worked with eight airlines to map the reason codes to their own systems: United, JetBlue, Delta, American, Air France, Lufthansa, SAS and Condor.

IATA, noting that the airline industry spends $150 million annually to settle $530 million in debit memos, likes ARC’s reason codes so much that it is adopting them for its own use.

ARC aims to have the information added to Memo Manager by the end of the year.

Next on the agenda is eliminating inaccurate, confusing, excessive and conflicting free text that often accompanies automated category fare rules. The auto-pricer tools in the GDSs can’t read free text, so its sole contribution to the process is to muddy the waters.