What’s the Deal with ARC Reconciliation?

ARC (Airlines Reporting Corporation) is a company that provides financial settlement services between airlines and travel management companies (TMCs), corporate travel departments (CTDs) and travel agencies. It’s important to agencies because ARC provides consolidated billing to receive their commissions and it is important to airlines because it is a central mechanism to settle those commissions. ARC’s accreditation process is also a way to establish legitimate players in the travel industry by maintaining financial accuracy, preventing fraud, ensuring compliance, resolving discrepancies, and fostering positive relationships within the travel industry. It is an essential practice for the financial health, transparency, and trustworthiness of businesses involved in the sale and distribution of airline tickets.

As part of using ARC settlement, an agency would need to reconcile against its back office. The reconciliation process involves matching the sales transactions made by TMCs, CTDs, and travel agencies with the corresponding tickets issued by airlines. It is also a crucial process for ensuring accurate financial transactions and resolving any discrepancies.

Why is it important?

ARC reconciliation is important for a variety of reasons. It helps to ensure the accuracy of financial transactions between airlines and TMCs, CTDs, and travel agencies. This will allow companies to verify that the amounts reported and settled align with the actual sales and ticket issuance, reducing the risk of financial discrepancies. The reconciliation process  also helps identify and prevent fraudulent activities. By comparing sales transactions with issued tickets, anomalies or irregularities can be detected, leading to further investigation and mitigation of potential fraud. 

Some other reasons as to why ARC reconciliation is so important include: Maintaining data integrity, compliance with industry regulations and standards, trust and transparency between airlines and TMCs/CTDs/travel agencies, enhancing overall operational efficiency, controlling cost by minimizing financial errors and reducing the need for extensive audits or investigations, and more!

Why is it difficult?

There are plenty of reasons as to why ARC reconciliation is important and needs to be taken seriously and done with care. But it is also notoriously difficult. Reconciliation in the travel industry, especially for TMCs, CTDs, and travel agencies, can be challenging due to many complexities such as exchanges, taxes, MCOs, etc. To add to the complexities that make ARC reconciliation difficult, it is also very time-consuming. The whole process can take anywhere from a few hours to having one FTE (or more) to accomplish,depending on your number of air transactions.

To overcome the challenges that many face with ARC reconciliation, TMCs, CTDs, and travel agencies should invest in technologies and solutions that are designed specifically to help streamline processes and enhance accuracy.

Want to learn more about how Grasp can help with your ARC reconciliation including reducing the time spent to just a few minutes?