AGENCY DEBIT MEMO (ADM) PURPOSE

1. AGENCY DEBIT MEMO (ADM)PURPOSE • New Resolution 850m describes the nature and purpose of the ADM. Per paragraph 1.1: • “The ADM serves to notify an Agent that unless there is some justification to the contrary, the Agent owes the issuing BSP Airline the amount shown on the ADM, for the reasons indicated…”

2. AGENCY DEBIT MEMO (ADM)LIMITATIONS • Resolution 850m, Paragraph 1.2. describes the circumstances in which ADM are to be used: • “1.2. ADMs are a legitimate accounting tool for use by all BSP Airlines to collect amounts or make adjustments to Agent transactions in respect of the issuance and use of Traffic Documents issued by or at the request of the Agent.”

3. CONTRACTUAL POSITION • IATA Accredited Agent executes an Agreement in the form of Resolution 824 (reproduced in the Travel Agent’s Handbook) • upon appointment, per the governing Passenger Sales Agency Rules, the Agreement becomes a bilateral contract between the Agent and the appointing airline • the contract is a sales agency agreement, covering transactions effected by the Agent on behalf of the airline • it follows that an ADM raised by a BSP Airline must stem from an action by the Agent, taken under the above contract, on behalf of that BSP Airline • except where Agent and airline have agreed, beforehand, to settle other transactions via the ADM

4. SCOPE OF ADM • an ADM results from a transaction initiated by an Agent • other charges may be billed by ADM, provided there is prior bilateral agreement with the Agent so debited • each Agent is entitled to a reasonable period of notice from receipt, before an ADM is processed through BSP

5. ADM PRACTICE - ORIGINS • the first IATA BSP ( 1971) included the ADM procedure • its aim was to adjust transactions reported by the Agent through the BSP • right to dispute an ADM with the BSP Airline has always existed • purpose of the ADM dispute procedure is to ensure that travel agents continue to maintain their pre-BSP, one-on-one, relationships with the airlines

6. TYPICAL ADMs • Typical examples of reasons for ADMs, used as legitimate • accounting tools include: • to adjust an incorrect fare calculation by an Agent • to recall retained commission which is not in fact payable • to capture a transaction that was not reported by the Agent at the time, through BSP • for pre-agreed charges payable by Agent (e.g. rental of automated ticketing equipment)

7. ADM DISPUTE RULES - PRINCIPLES • dispute procedure is provided in Resolution 832, § 1.7.14 (except Europe) and in Resolution 818, Attachment ‘A’ § 1.7.12 (Europe only) • an ADM can be disputed for cause • reasonable notice (i.e. at least 14 days) of each ADM must be given • when ADM dispute is lodged, BSP Airline must take timely action • a duly disputed ADM is taken out of the BSP Billing process • each ADM must give an airline contact point in adequate detail

8. DISPUTED ADMs (1) • ADMs that have been met and disputed: • for charges not imputable to the Agent (e.g. excess baggage) • for repatriation costs, when passenger was refused entry at destination • ADM issued out of time • to cover multiple and unrelated sales transactions, instead of for a specific transaction • for a fare adjustment stemming from a revalidation to the ticket which was made by the BSP Airline itself

9. DISPUTED ADMs (2) • dispute action is ignored and ADM is processed through the BSP by the airline • for ‘administration fees’ or other charges levied by the BSP Airline, which are arbitrary or disproportionate to cost and/or for which prior notice has not been given to the Agent • for another Agent’s sales transaction • for another Airline’s ticket • for the passenger’s transgression outside Agent’s control • without adequate supporting documentation or explanation • the ‘corrections’ shown in the ADM are themselves erroneous

10. GETTING TO GRIPS WITH ADMs (1) • ADM usage is increasing - with heightened scope for friction • this is driven partly by enhanced technology and partly by more rigorous airline cost control measures and partly by sometimes disfunctional or time-expired data held in GDS computers • industry consultative groups have sought and are seeking to overcome the problems • running adjustments to Resolution 850m, itself a fairly recent tool, evidence these efforts to overcome difficulties • Agents and their associations are becoming more sensitive to issues relating to loose ADM usage

11. GETTING TO GRIPS WITH ADMs (2) • initially inadequate in several respects, Resolution 850m has been progressively amended and improved by the Passenger Agency Conference, during each of its 3 years of application • both sides of the industry must become familiar with and follow new Resolution 850m, now in effect • Some travel agents do not do not systematically and promptly monitor all incoming ADMs • BSPlink potential is not always fully exploited by either the issuer or the recipient of an ADM

12. EFFECTIVE ADM DEMURRAL (1) • monitor incoming ADMs as they arrive – professionals are vigilant • does the ADM meet the Resolution 850m tests? Be watchful • is the ADM in conformity with the BSP Airline’s published ADM policy? Check the policy • is the ADM for a legitimate charge? Be objective – in practice, most ADMs are justified • is the revised calculation on the ADM itself correct?

13. EFFECTIVE ADM DEMURRAL (2) • if you disagree with an ADM, inform the Airline contact, in writing, with copy to the BSP manager, giving your reasons and seeking corrective action • if the disagreement is not promptly resolved and the BSP Airline maintains the ADM for processing, you can either accept the impending debit or you can formally dispute it, before it is debited (Resolution 850m gives the deadlines) • a duly disputed ADM which remains unpaid will not normally give rise to collective IATA disciplinary action

14. QUERYING AN ADM • each ADM must now include contact details of a person or department of the ADM issuing airline • in the first instance, contact that person/department • if the Airline either rejects your initial protest and upholds the debit action, and you nevertheless wish to persevere, then ADM dispute action is outlined in Resolution 832 – §1.7.14 (except Europe) and Resolution 818, Attachment ‘A’, §1.7.12

15. INITIATING ADM DISPUTE PROCEDURE • notify the Airline in writing of the dispute action without delay, with copy to the BSP Manager • set out the grounds for the dispute, in adequate detail • ask to meet a responsible representative of the airline to discuss the disputed item • some airlines outsource ADM preparation, so ensure you are in fact dealing with a n airline contact • if the dispute remains unresolved, suggest to the airline in writing (copy to BSP Manager) that the matter be referred jointly to the Travel Agency Commissioner for a solution (per Resolution 805m, §4.10)

16. CONCLUSIONS • ADMs are the by-product of modern audit technology, they are on the increase and are here to stay • From the incomplete data available it appears that actual ADM dispute rates are low and that relatively few BSP Airlines are involved in them • loose discipline by some Agents is also an issue • industry as a whole stands to benefit by the clearer, simpler and more balanced ADM procedure, now in place