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 Agents 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 Agents sales transaction
• for another Airlines ticket
• for the passengers transgression outside Agents
  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 Airlines
  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