The functions and activities have also increased manifold. Of late, airlines realized that travel agencies/tour operators could help to achieve higher passenger load factors by filling empty seats and providing these at significantly discounted fares in varying combination with other elements that make up a packaged inclusive tour.
It is an accepted proposition that one of the most important components of a travel agency/tour operator’s revenue structure is airline commission. However, the sale and purchase of an airline’s tickets are regulated by well defined set norms.
The travel agency/tour operator needs to be recognized or approved by the airlines. In fact, the sale and purchase of International airlines tickets are regulated by the international Air Transport Association (IATA) whereas the sale and purchase of domestic airline’s tickets are approved/ regulated by the concerned Government and the Ministry of Tourism or Civil Aviation.
These approvals are necessary in all countries whether travel agencies/tour operators are appointed/ approved by IATA and/or Govt. (Civil Aviation) or any other agency authorized by these such as ARC in the US and Canada etc.
In these countries, the Airlines Reporting Corporation (ARC) which replaced the Air Traffic Conference (ATC) serves the domestic airline industry. Its stockholders are the passenger carriers of the Air Transport Association (ATA) but serve other airlines both international and domestic, can participate and are the members of ARC.
According to industry agent’s handbook, the main objective of ARC is to provide a method of approving/authorizing travel agency/tour operator locations for the sale of airlines tickets and cost effective procedures for processing records and funds of such sales to customers.
The main requirements to become ARC member are: Financial soundness; Qualified and professionally experienced personnel; Location; Other requirements are—Goodwill, History, Ownership Structure, Bank Accounts, Financial Integrity, Market Size, Previous Sales/Turnover, Net Profit etc.
Thus, to qualify for membership of ARC, travel agency/tour operator has to go through and satisfy several criteria, after which an approval is obtained. The ARC has rights to deny approval to any travel agency/ tour operator without assigning any reason(s).