Market analysis report 2017

Agency Debit Memos

ADM Market Analysis
NOTICE

DISCLAIMER. This Agency Debit Memo (ADM) Market Analysis Report (the “Report”) is based on the 2017 ADM survey, for which the International
Air Transport Association (IATA) has granted permission to use and publish the information. No reader should act on the basis of any such
information contained in the Report without taking appropriate professional advice. Although every effort has been made to ensure accuracy, IATA
shall not be held responsible for any loss or damage caused by errors, omissions, misprints or misinterpretation of the contents hereof. Furthermore,
IATA expressly disclaims any and all liability to any person or entity in respect of anything done or omitted, and the consequences of anything done
or omitted, by any such person or entity in reliance on the contents of this Report.

IATA takes sole responsibility for the final form and content of this document, subject to the limitations noted above. The mention of specific
companies or products in this Report does not imply that they are endorsed or recommended by IATA in preference to others of a similar nature
which are not mentioned or advertised.

2017 Agency Debit Memo (ADM) Market Analysis Report © international air transport association. Agency Debit Memo Market Analysis Report©
international air transport association. All Rights Reserved. No part of either publication may be used, reproduced, recast, reformatted or
transmitted in any form by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system,
without the prior written permission from:

Senior Vice President

Financial and Distribution Services

International Air Transport Association

33, Route de l'Aeroport

PO Box 416

1215 Geneva - 15 Airport

Switzerland

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ADM Market Analysis

Contents

01 Introduction
Page 4
02 Executive Summary
Page 5
03 Methodology
Page 5
04 Market Research
Survey Completion Status & Geographic
Distribution
Page 6
05 Market Analysis- Survey results
Page 8
06 Market Segmentation- Benchmark average research results
Page 23
07 Key Opportunities & Recommendations
Page 28
08 Annex
Page 29

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ADM Market Analysis

01 Introduction
Agent Debit Memo (ADM) is the legitimate accounting tool used by for Memo issuance and reduce the number of issuances by analyzing the
airlines to collect adjustments for STDs issued by Agents. (Reso 850m). root causes, through improved controls and training. The goal is to reduce
or eliminate ADMs by fixing problems in the industry supply chain through
There is a significant matter of contention with regard to ADMs and the
the close collaboration of the stakeholders.
negative impact on the Air transport industry representing a substantial
administrative cost for Airlines, Travel Agents and the broader community In the interest of assisting our members, we have undertaken a market
involved in the ticketing distribution chain. Over time, Airlines and Agent analysis in order to understand the situation of Airlines and Travel Agents
community have expressed their respective concerns to IATA about their with respect to ADMs and to be able to offer concrete solutions for their
challenges when managing ADMs. specific needs. On the other hand, this study aims to provide market
intelligence foundations that will help IATA to formulate a strategy for
As such, ADMs are an enormous source of friction between business
promoting the ADMWG best practices more efficiently.
partners, therefore the Agency Debit Memo Working Group (ADMWG)
involves all industry actors (Airlines, Agents and their Associations, GDSs, This analysis is built upon a market research of all Airlines and Travel
ATPCO, ARC & IATA SMEs) working together in a data-focused and blame- Agents that are BSP/ASD users around the world.
free environment, where constructive solution-oriented discussions take
The report is structured with, first, the executive summary and
place to bring in reduction of the workload required for capturing revenue
methodology of the assessment. This is followed by the market research
leakages, thereby reducing ADM volumes and settlement timeframes, as
with the survey completion status report and geographic distribution. The
well as improving business relationships amongst the industry. The aim
market analysis section sets out the research results including an
of the Working Group is to improve the inefficiencies in the current
interpretation of the figures and specific objectives. Lastly, the market
distribution chain, which have been identified through ADM data.
segmentation and the final section includes a summary of the analysis
The ADM Management & Reduction Project consists of a set of actions to with the key challenges considered as actions to take.
categorize the issuances of ADM by formalizing the reporting of Reasons

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ADM Market Analysis

02 Executive summary: Overall results

 We received 54 responses from Airlines (18% response rate) to the → Enhance the BSPLink/ASD communication functionalities in
ADM survey; a result that reveals that IATA member Airlines are order to offer a single and effective communication platform
not completely engaged with the ADM subject. for the parties involved in the ADM process.
Travel Agents, however, corroborate a strong interest with a → Standardize a vehicle that helps to facilitate a process in
number of 968 responses from a total of 31,000 Travel Agent Head BSPLink/ASD that easily identifies an auto-priced transaction
Offices; a high response rate considering the vast market segment and enables the GDS to have a direct dialogue with the Airline
and that regardless the number of Head Offices per company, the when enabled by Airline.
survey policy required only one response per company. → Improve the overall relationship and communication between
 As a preliminary remark, this is the first time that IATA undertakes the parties involved in the ADM distributing chain.
a global market research to analyze all of the aspects respecting → Design a competent and unique Airline ADM information
ADMs. Despite the fact that this is a sensitive matter for both Central repository in BSP Link/ASD that is easy for Agents to
Airlines and Agents, the results are quite useful and consistent access.
with the purpose of the market needs. → Create an Airline standard dynamic ADM Policy module that is
 Airlines and Agents acknowledge the issues regarding ADMs and flexible for Airlines to adopt and that can be easily understood
the administration costs involved, although some Airlines were by Travel Agents and GDSs.
unable to provide specific data. This suggests that in some cases
the data requested is difficult to obtain. 03 Methodology
As we embarked upon the ADM Market Analysis, we aimed to gain
 The 8 key focus areas to work on include:
insightful perspectives and market-based data around the topic of ADMs
→ Assist Agents and Airlines to reduce the administration costs
from IATA members themselves, with a view to have a global
associated to the management of ADMs.
understanding of the ADM management situation. In other words, our
→ Elaborate a solid and effective communication strategy for
purpose was to capture the reality of the general and specific issues that
promoting the ADM best practices guideline to a global
affect Airlines and Agents daily when dealing with ADMs.
community of Airlines and Agents.
→ Provide ADM business intelligence tools that are accountable To that end, the ADM Reduction Project team conducted an online survey
to the specific purposes of usage that Airlines and Agents in January 2017 that was distributed to the pertinent Revenue Accounting
manifested separately. departments of 300 Airlines and 31,000 Agent Head Offices that are part
of BSP.

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ADM Market Analysis

04 Market Research- Survey Completion Status & Geographic Distribution

Airlines

AREA 1 AREA 2 AREA 3

Asia
Europe
North
America
Middle
East
Africa

South Southwest
America Pacific

 The ADM survey was sent to the Revenue Accounting departments of 300 Airlines and we received 54 responses to the questionnaire, a response rate of
18% that reflects a low engagement.
 From a total of 39 countries that participated in the survey, the map highlights the response average distributed by IATA areas from which 20% of
responses were obtained from Area 2, 16% Area 3 and 13% from Area 1.

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ADM Market Analysis

Travel Agents

 The survey was send to around 31,000 Agent Head Offices from which 968 participated in the market research. We consider this a high response rate with
strong involvement taking into account that we addressed a vast market segment and that the survey was sent to all IATA Accredited Head Office
locations including international Agent groups that have more than one Head Office, only one response per company was required. Moreover, the survey
was distributed in English for all markets except China (simplified Chinese), causing language limitations for some French and Spanish speaking countries.
 From the 108 countries that participated, the map points out the main countries where most responses came from. The top 4 are Russia and South Africa
(6%), continuing with a 5% presence from Canada, Germany and United Kingdom.

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ADM Market Analysis

05 Market Analysis- Survey results

Q1- Agents where asked; what is the average administration cost of each ADM in USD? Please take into consideration man power and
external party company fees.

a) What is the average administration cost of each ADM (USD)? b) Out of these, how much is allocated to external parties (USD)?

300 45% 450 80%

40% 400 70%

250
35% 350
60%
200 30% 300
50%
25% 250
150 40%
Responses 20% Responses 200
30%
100 15% 150
20%
10% 100
50
5% 50 10%

0 0% 0 0%
Cost Cost
(USD) (USD)

Responses Percentage Responses Percentage

Minimum cost: $0 Maximum cost: $285 Average cost: $46 Minimum cost: $0 Maximum cost: $250 Average cost: $15

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ADM Market Analysis

In order to showcase the results of 968 Travel Agents, responses were categorized and grouped by cost range (displayed in chart a. and b. in ‘Cost USD’
categories):

a) From the 968 Agents that participated in the survey, 721 provided a valid answer for the administration cost of an ADM for which we applied
the criteria of not taking into consideration responses such as; ‘not available’ or an incorrect answer with a figure that is equal or superior than
300 USD. The results reveal that the average administration cost of each ADM is 46 USD. In the same manner, most of the Agents’ cost do not
exceed the amount of 60 dollars per ADM with 39% paying an admin cost that is in a range between 0 to 20 dollars per ADM, consequently the
quantity drops to 22% whose cost is around 20 to 40 USD and 18% face a cost between 40 to 60 USD.
b) 61% of the Agents who replied the survey were able to specify how much of the administration cost is allocated to external parties. It is
important to remark that nearly all Agents allocate from 0 to 40 dollars to external parties and the average cost is 15 USD.

→ Objectives: The purpose of this study was to benchmark the administrative cost for an ADM versus the average value of ADMs to identify the level
of cost-efficiency for ADM management. In 2016, the global average value of a financial adjustment made through an ADM was USD213.3 per
transaction. For Travel Agents, the management of ADMs appears to be a costly yet unavoidable process to maintain as the cost is over 20% of the
average adjustment value itself.
→ Opportunities: There is significant room for improvement where the cost of ADM administration can be reduced by identifying solutions that will
streamline and simplify the ADM management process.

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 ADM Market Analysis
Q1- Airlines where asked; what is the average administration cost of each ADM in USD? Please take into consideration man power and external
party company fees.

a) What is the average administration cost of each ADM (USD)? b) Out of these, how much is allocated to external parties (USD)?

18 60% 14 70%

16
12 60%
50%
14
10 50%
12 40%

10 8 40%
Responses 30% Responses
8
6 30%

6 20%
4 20%
4
10%
2 10%
2

0 0% 0 0%
0-20 20-40 40-60 60-80 80-100 100-120 Cost 0-10 11-20 21-30 31-40 41-100 Cost
(USD) (USD)
Responses Percentage Responses Percentage

Minimum cost: $0 Maximum cost: $103 Average cost: $26 Minimum cost: $0 Maximum cost: $93 Average cost: $17

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ADM Market Analysis

When asking Airlines the average administration cost of each ADM we were surprised to detect that 34 out of 54 who participated in the study were able
to respond with a direct number. Aside from those airlines that indicated this information cannot be provided, most of them shared; an approximation,
a percentage or stated that ‘it is not easy to obtain each ADM cost’. Nonetheless, for those Airlines that could not provide a direct cost but did mention
an indicative number or percentage, we were able to interpret the data and calculate the cost based on the Airlines ADM data obtained from the BSP
database.

a) Taking a look into the Airlines situation regarding the administration cost of ADMs, we can observe that the overall cost expenditure is lower
constituting over half of the agents cost. The average administration cost of each ADM is 26 USD, furthermore, 50% of the airlines cost is between 0
and 20 dollars per ADM, while a 24% have a cost of 20 to 40 USD.
b) 22 Airlines (41%) from the 54 that replied to the survey indicated the cost that is allocated to external parties. It is worth stressing that the vast
majority designate from 0 to 20 dollars to external parties and the average cost is 17 USD.

→ Objectives: The objective of this question, similarly to the one posed to the Travel Agents, would help the industry identify the cost-efficiency for
ADM Management. Whilst the response rate from Airlines was not strong enough to draw definite conclusions, the usable data indicated that the
administration cost of ADMs for Airlines are approximately 12.2% of an average ADM. During 2016, approximately 45% of global ADMs issued were
of a transaction value of less than 30 USD. Keeping in mind that ADMs are a mechanism to recover for revenue leakage, the cost associated to
administrating such leakages should be kept to a minimal as much as possible.
→ Opportunities: Whilst some Airlines do mitigate partially their cost via including administration fees in ADMs, the most effective way to improve this
cost proportion to the industry would be to consider a lean and efficient revenue auditing system, as well as solving some root causes that may
reduce the need for ADMs, thereby reducing the post-billing recovery workload altogether.

Further in the analysis (Refer to Q- Please indicate the revenue audit process that is used by your airline), it was indicated that the proportion of
Airlines using external auditing parties and in-house auditing systems were very similar, and therefore there was no indication that the
opportunities for cost reduction could come from either completely outsourcing or centrally managing this activity.

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ADM Market Analysis

Q2- Agents and Airlines where asked; what would be the best way for IATA to promote best practices from the ADMWG to you and your
community?.
Travel Agents

83% - E-mail

40% - ADMWG Website

39%- Monthly Newsletter

8% - Monthly Conference Calls

6% - Other

*Respondents had the possibility to choose more than one answer

83% 40% 39% 8% 6%

The majority of the Travel 40% Prefer the ADMWG Similar to ADMWG Website Only 8% chose monthly From the ‘Other’ options
Agents consider E-mail as Website to be informed 39% of Agents selected the conference calls; stating suggested by Agents; the
the best way for IATA to about best practices. This ADMWG Newsletter, which that this is not a preferable most popular was BSPLink
promote the ADMWG best figure evidences that the confirms that the ADMWG channel. Although, it has with 21%,
practices. This indicates us ADMWG Website is a team should evaluate the been considered by the Workshops/Webinars with
that the most effective way valuable source of alternative of sending ADMWG team that in some 11%, 10% mentioned
of maintaining this information, thus it should newsletters to the global cases calls are useful when information should be
audience informed is the be updated regularly agent community to keep there is a need of provided by GDS and 8%
use of direct according to the latest them informed of the latest discussing specific matters. prefer phone in terms of
communication methods project updates. project process, ADM data calls or chats.
such as e-mails. and news.

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ADM Market Analysis
Airlines

74% - E-mail

62% - Monthly Newsletter

55% - ADMWG Website

15% - Monthly Conference Calls

4% - Other

*Respondents had the possibility to choose more than one answer

74% 62% 55% 15% 4%

Reassuringly, E-mail is the A higher number of Airlines 55% said they’d prefer the In the same position as Just a few Airlines
best way for IATA to chose the ADMWG Website as a source of Agents, Airlines are not so suggested ‘Other’ options
promote the ADMWG best Newsletter, proving again reference. This indicates enthusiastic about having like webinars and trainings.
practices as it is considered that it is a competent that a higher proportion of conference calls for
the first choice both communication tool to take Airlines is willing to refer to learning about the best
Airlines and Agents. into consideration. the Website when it comes practices.
to best practices.

→ Objectives- According to the study, the most effective communication strategy that the ADM Project team should pursue to promote the best practice
guideline to a global community of Airlines and Agents is the use of direct communication tools such as e-mails and newsletters. However, it is proven
that the ADMWG Website is a highly competitive source of reference especially for the Airlines.
→ Opportunity-
 Analyze the possibility of incorporating the ADMWG best practices guideline in BSPLink and examine how to communicate it effectively via e-
mail and newsletter.
 Liaise with the IATA training team to study all the ADM areas that are suitable for training development and review the feasibility of offering
new training proposals.

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ADM Market Analysis
Q3- Agents and Airlines where asked; what is their main source of information for obtaining travel industry news?

Travel Agents Airlines

Social Media(s) 3% Twitter 6%

Twitter 5%
Other sources 12%
LinkedIn 8%
Blogs 12%
Blogs 12%
LinkedIn 14%
Other sources 21%
Facebook 20%
Facebook 21%
Specialized Newspapers 36%
Specialized Newspapers 28%
Specialized Magazines 54%
Specialized Magazines 42%
Digital Press 84%
Digital Press 68%

0% 10% 20% 30% 40% 50% 60% 70% 80%

0% 20% 40% 60% 80% 100%

It is shown here that Agents and Airlines have a similar ranking of preferences when it comes to their main source of information for obtaining travel
industry news. For both parties Digital Press is the most concurred source, followed by Specialized Magazines and Specialized Newspapers. While
Facebook scores the fourth position, it is clear that it is the most used Social Media source for travel industry news. Nevertheless, ‘Other sources’ also
seem to be significant for which ‘e-mails, newsletters and direct communication’ where mostly mentioned by Agents and ‘Webinars’ by Airlines.

* Social Media(s) refers to other forms of Social Media in markets where the mentioned applications are not available.

→ Objectives- The fact that Airlines and Agents are aligned when choosing their main information source for obtaining travel industry news leads the ADM
Project team to focus in the same sources when trying to reach both parties. In future need of publishing relevant news about ADMs that will globally
impact the travel industry, these figures determine the most appropriate channels for reaching the target audience efficiently.

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ADM Market Analysis
Q4- Agents and Airlines where asked; If IATA were to provide you with ADM business intelligence tools such as monthly dashboards, what main
purpose would you find for it?
When asked if IATA were to provide its members with
80% Travel Agents ADM business intelligence tools, Airlines and Agents
70% seem to have a different prioritization for the main
60% purpose of its usage. Whereas a wide range of Agents
(71%) will use the tools for ‘Decreasing operating cost’,
50%
‘Gain market intelligence’ was considered by 40%
40% followed by ‘Identify key trends and patterns’ with 36%.
30% Moreover, the Airlines show a quite similar degree of
preferences amongst each of the purposes; 57%
20%
selected ‘Gain market intelligence’ while 55% equally
10% chose ‘Identify key trends and patterns’, ‘Identify
0%
opportunities’ and ‘Benchmarking’.
Decrease Gain market Identify key Identify new Benchmarking Return of Other
→ Objectives- The prevalent purposes lead us to
operating intelligence trends and opportunities Investment
costs patterns in (ROI) understand the common areas of significance when
your designing ADM business intelligence tools. For
organization’s Travel Agents, the strong response rate in
decreasing operating costs are clear indications that
Airlines
correlate to Q1 where ADM management activities
60% are more costly to Agents than Airlines.
50%
→ Opportunities- There are strong opportunities for
40% IATA to support Travel Agents in helping them
identify weaknesses for improvement and thereby
30%
decreasing operating costs; notwithstanding the
20% opportunities to also provide automation that may
reduce some manual work at the same time.
10%
Therefore Operational tools would appear to be fit
0% for purpose for Travel Agents rather than Business
Gain market Identify key Identify new Benchmarking Decrease Return of Other Intelligence tools.
intelligence trends and opportunities operating Investment
patterns in costs (ROI) On the contrary, the opportunities for Airlines
your
relate to organizational positioning and
organization’s
strengthening competitive advantages and Business
Intelligence data would appear valuable for Airlines.
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ADM Market Analysis
Q5- Agents and Airlines where asked what is their preferred method of communication with each other?

Agents preferred method of communication with the Airlines Airlines preferred method of communication with Agents

86% E-mail 79% E-mail

57% BSPLink/ASD 75% BSPLink/ASD

17% Other 12% Other

*Respondents had the possibility to choose more than one method

A significant amount of Agents prefer E-mail to On the other hand, the majority of Airlines (79%) also
communicate with Airlines, whilst more than a half prefer have a preference to use E-mail when communicating
BSPLink /ASD and 17% mentioned other methods from with the Agents but we can see that BSPLink/ASD is also a
which phone calls is the most common. preferable channel by a close majority of 75%. These
figures implicate that BSPLink/ASD is currently considered
a valuable method for the Airlines. From the other
methods; phone calls and GDS’s communication platforms
were mostly mentioned.

→ Objectives: For ADM matters the Passenger Agency Conference Resolutions govern the communication channel between agents and airlines to be
BSPLink/ASD. This question reflects how fit for purpose are the tools that IATA is currently providing to the industry. Despite having a Resolution
mandate, the research reflects that the current platforms provided to the industry cannot fully substitute Email usage and Travel Agents and
Airlines are still having to revert to Email communication in addition to essential BSPLink conversations. This contributes to a time and labor
intensive communication process.
→ Opportunity: Improve BSPLink/ASD communication functionalities that would facilitate a more efficient and effective dialogue between the parties
involved in an ADM research process (including the GDS), will encourage a gradual movement to a single communication platform and remove the
requirement for duplication in documentation efforts such as having to attach email communications to ADM comments, or taking discussions
outside of BSPLink/ASD due to character limits and access issues where not all users are authorized to utilize the full BSPLink/ASD functionalities
(not limited to ADMs). 16
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ADM Market Analysis
Q6- Agents and Airlines where asked what is their preferred method of communication with the GDSs?

Agents preferred method of communication with the GDSs Airlines preferred method of communication with the GDSs

86% E-mail 85% E-mail

34% BSPLink/ASD 32% BSPLink/ASD

23% Other 13% Other

*Respondents had the possibility to choose more than one method

We found that the same range of 86% of Agents that Similarly to Agents, 85% of Airlines favor E-mail as the
selected Email as main communication method with the main communication channel with GDSs and that just 32%
Airlines, have the same preference for communicating chose BSPLink/ASD.
with the GDSs. As suspected, this proves again that the
BSPLink /ASD platform is not beneficial for the
communication between agents and GDSs.

→ Objectives: These findings are reassuring that it is necessary to enhance the ADM communication channel in order to facilitate the dialogue
between Agents and Airlines with the GDSs. Certainly, E-mail is the top choice in view of the fact that BSPLink/ ASD has very limited functionalities
to support an easy and fluent communication between parties.
→ Opportunity: Assist the GDSs so that they are capable of supporting their customers through BSPLink accordingly. As a consequence, it will
indirectly encourage airlines and agents to use BSPLink/ASD for communicating with the GDSs.

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ADM Market Analysis
Q7 & 8 - Airlines were asked:

 Does your airline have any agreement with GDSs for recovering ADMs that are related to auto-priced transactions?

We have discovered that a wide range of the Airlines

88% NO segment do not have any agreement with GDSs for
recovering ADMs that are related to auto-priced
12% YES transactions. This proves that the most important element
of communication lies between the travel agencies and
their system providers during the research process.

 In case an ADM is related to auto-priced transactions, would your Airline be willing to engage in direct dialogue with the GDS?

At first glance, Airlines appear to be willing to have direct

dialogue with the GDSs, with 80% saying yes and 20%
claiming they are not interested.
21%
It’s important to highlight that the dialogue between
Yes Airlines and GDSs is currently existing today through e-
79% No mail as demonstrated in question 6 (preferred method of
communication with the GDSs). Thus, the existing
platform of communication is not standardized and to this
effect, our goal is to standardize a vehicle that helps to
facilitate a better interaction within parties through
BSPLink.

→ Objectives: This confirms again that it is primordial to improve the communication channel in BSPLink/ASD as it is shown that most Airlines do agree to
engage in a potential dialogue with the GDSs. Previous to this study, the ADMWG identified the need of implementing a solution to insert the GDSs
comment field into the ADM comment chain in BSPLink/ASD, as well as adding email functionality and additional alerts that would target specific
individuals. Implementation will be effective August 2017.
→ Opportunity: Whilst there is no significant evidence that Airlines are involving the GDSs directly in the financial transaction of the ADM, there is a strong
will for Airlines to liaise directly with the GDS when there is an ADM case that relates to auto-priced transactions.
Distinguishing between manual and automatic transactions today is not a straight forward process and involves individual investigation into each original
transaction. The ability to easily identify an auto-priced transaction and for the GDS to directly be able to engage dialogue with Airlines in these scenarios
would potentially reduce the need for mass issuance of ADMs to Travel Agents (and their individual efforts to investigate each ADM) when there is a
general issue with a certain GDS that could be directly solved with the GDS being informed at an early stage.
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ADM Market Analysis
Q9- Airlines and Agents were asked to rate the Airline-Agent relationship for ADMs in general on a scale of 1 – 10 with 10 being the most
positive:
Agents Airlines

Rank 1-10 Percentage Frequency Rank 1-10 Percentage Frequency

5 22% 190 7 27% 14
1 15% 135 5 23% 12
2 12% 108 8 21% 11
3 11% 95 6 17% 9
7 10% 83 3 4% 2
4 8% 69 10 4% 2
8 8% 68 4 2% 1
6 7% 65 9 2% 1
9 4% 35 1 0% 0
10 3% 24 2 0% 0

The Agents average rank is The Airlines average rank is

4.5 7

Most Agents consider that the relationship with the Airlines when managing ADMs is unsatisfactory given that the average rate is 4.5 and more than a half
(68%) rated it with 5 points or lower. In the contrary, the Airlines perception of the relationship with the Agents is notoriously better and we can
conclude that they are overall satisfied since 71% rated it higher than 5 and the average rate is 7.

→ Objectives: One of the main goals of the ADMWG is to realize solutions that are able to improve the relationship between the parties involved in the
ADM processes and procedures. However, it is important to first understand the particular challenges faced by the Agents in order to develop a set of
actions for reducing the issues that cause friction in the relationship. To this interest, the working group should continue supporting a ‘blame free’
environment where both Agents and Airlines can openly raise their specific concerns and work together to address those in consensus.

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ADM Market Analysis
Q10- Agents were asked: On a scale of 1 – 10 with 10 being the most positive, how would you rate your communication with the Airlines and
with the GDSs regarding ADMs

Communication with the Airlines regarding ADMs Communication with the GDSs regarding ADMs

Rank 1-10 Percentage Frequency Rank 1-10 Percentage Frequency

5 24% 217 5 22% 197
1 12% 111 7 12% 110
7 12% 111 8 11% 97
2 11% 97 1 10% 86
3 10% 88 2 9% 84
4 9% 77 6 9% 80
8 8% 72 4 7% 66
6 8% 68 9 7% 66
9 4% 32 3 7% 63
10 3% 23 10 6% 52

The Average rank is The Average rank is

4 5 4 5.4

→ Certainly, an average rank of 5 implies that the communication between Agents and Airlines is indeed regular. To this effect, 66% of Agents have rated the
communication with 5 or less. In addition, Agents think that the communication with the GDSs regarding ADMs is standard with an average rank of 5.4.
Despite the similar average rank between Agents communication with Airlines and GDSs, it is noteworthy that 67% of Agents ranked the communication
with the GDSs with 5 or higher.
→ Objectives: The first step for enhancing the relationship between the parties involved in the ADM process is to improve the communication by stablishing an
open dialogue flow during the process. These market indicators reinforce that there is ample room for improvement; starting by fostering a philosophy that
encourages data driven actions (leaving emotions and blame aside) as well as encourage Airlines, Agents and GDSs to be partners towards the common goal
of ADM reduction.
Secondly, the ADMWG is implementing a set of solutions (Direct link to access the list of solutions) which in practice have the aim of standardizing global
ADM policies and processes as well as solving the communication deficiencies.

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ADM Market Analysis

Q11- Agents were asked where would be the best place to dispose a central repository for their Agency to access important information such as
query Airline's ADM policies, commission control setups and credit card acceptances?

It is demonstrated that BSPLink/ASD is the optimum place

13%
to dispose a central repository by some considerable
margin of 84%. As other alternatives for placing the
repository, Agents proposed E-mail as a predominant
solution, followed by the idea to access the information
38% through the Airlines and GDSs source.

84%

BSPLink/ASD IATA Customer Portal Other

→ Objectives: Design an central repository in BSP Link/ASD with the purpose of assisting the ADM Project to provide a competent and unique source that
is easy for Agents to access, search and have visibility to stable and reliable information. This way we can help our members to spend less resources and
time when in the need of information related to ADMs and its research.

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ADM Market Analysis
Q12 & 13- Airlines were asked:

 Please indicate the revenue audit process that is used by your airline Nearly the same volume of Airlines utilize ‘External party’
and ‘In-house audit’ as an option for their revenue audit
process. In like manner, 30% of the Airlines use both
External party 67% internal and external parties at the same time.

67% of Airlines use external outsourcing wherein 4 main

companies seem have the strongest presence in this
In-house audit 63% market share.
*Respondents had the possibility to choose all that apply → Objectives: This question supports the analysis of Q1
for Airlines.
 Please identify the critical information that is in your ADM policy
With this question Airlines have identified the critical
100% information that is in their ADM policies and the results
exhibit that the great majority of 86% took into account
90%
‘Conditions for issuance’ and 62% ‘Administration Fees
80% associated with ADM issuance’. Furthermore, ‘Dispute
70% contacts’ and ‘Conditions of Revenue Auditing’ were less
recognized but they also seem to be a valued factor in the
60%
ADM policy.
50%
→ Objectives: There is a planned initiative to create a
40% dynamic ADM Policy module that would be standard
30%
and caters for needs of all Airline business modes. The
responses to this question provides IATA with
20% guidance in which areas to focus on to identify
10% essential elements.
→ The low “skipped answer” rate (7%) and high
0%
commonality to “Conditions for ADM issuance” show
Conditions for Administration Dispute contacts Conditions of Other
ADM issuance Fees associated Revenue Auditing that there is genuine similarities and strong
with ADM opportunity for the industry to share a dynamic ADM
issuance
Policy module that would at least host the essential
common conditions for each Airline’s ADM Policy,
with dynamic fields that will create flexibility for
Airlines to adopt the module to suit their specific
needs in a format that can be easily understood by
Travel Agents and GDSs. 22
ADM Market Analysis

06 Market Segmentation- Benchmark average research results

The purpose of the following market segmentation is to facilitate ADM market metrics that will serve as a benchmarking tool for Airlines and Agents in order to
evaluate one's company position within the industry and compare its performance in terms of the ADM management and processes.

Airlines- Sales vs ADM Value based in 2016 data

Airlines annual sales less than 1 Billion USD Airlines annual sales between 1 and 5 Billion USD Airlines annual sales more than 5 Billion USD
49% 31% 20%

Airlines- Research Results

Revenue audit process that is used by the Airline *
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
In-house 74% 50% 50%
External Party 48% 94% 70%
Admin cost per ADM
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
0 USD - 20 USD 39% 25% 20%
21 USD - 40 USD 11% 13% 40%
More than 40 USD 14% 25% 0%
Does not know 36% 38% 40%
Admin cost per ADM allocated to External Parties
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
0 USD - 20 USD 18% 31% 10%
21 USD - 40 USD 0% 19% 10%
More than 40 USD 0% 12% 0%
Does not know 68% 38% 80%
Information in ADM Policy
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
Administration Fees associated with ADM issuance 46% 69% 80%

23
ADM Market Analysis
Conditions for ADM issuance 86% 81% 70%
Conditions of Revenue Auditing 39% 50% 60%
Dispute contacts 39% 69% 70%
Other 14% 13% 30%
The best way for IATA to promote best practices from the ADMWG to you and your community?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
ADM WG website 46% 56% 80%
E-mail 86% 56% 70%
Monthly conference calls 14% 13% 20%
Monthly newsletters 61% 63% 70%
Other 4% 6% 10%
Main source of information for travel industry news?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
Blogs 11% 6% 0%
Digital press 82% 69% 70%
Facebook 21% 13% 0%
LinkedIn 7% 19% 0%
Other sources 14% 13% 20%
Specialized Magazines 54% 25% 60%
Specialized Newspapers 29% 19% 50%
Twitter 4% 0% 0%
If IATA were to provide you with ADM business intelligence tools such as monthly dashboards, what main purpose would you find for it?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
Benchmarking 54% 56% 50%
Decrease operating costs 46% 56% 30%
Gain market intelligence 46% 63% 70%
Identify key trends and patterns in your organization’s 50% 63% 50%
Identify new opportunities 50% 69% 40%
Other 4% 0% 10%
Return of Investment (ROI) 14% 44% 10%

24
ADM Market Analysis
Preferred method of communication with the Travel Agents?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
BSPLink 68% 81% 80%
E-mail 79% 69% 80%
Other 4% 19% 20%
Preferred method of communication with the GDSs?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
BSPLink 36% 25% 30%
E-mail 82% 88% 90%
Other 18% 6% 20%
Does your airline have any agreement with GDSs for recovering ADMs that are related to auto-priced transactions?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
No 100% 63% 70%
Yes 0% 25% 20%
In case an ADM is related to auto-priced transactions, would your Airline be willing to engage in direct dialogue with the GDS?
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
No 21% 13% 20%
Yes 71% 75% 70%
Rate the Airline-Agent relationship for ADMs in general
Airlines < 1 Billion USD 1 - 5 Billion USD > 5 Billion USD
Average 6 7 6
Most common answer (mode) 5 6 7
* Note:
- The average numbers in the market size segmentation are approximate as not all of the airlines provided responses to all of the survey questions.
- The segmentation is based in a number of 51 surveys from airlines, 2 of the responses submitted were excluded as the airlines did not have any ADMs issued
in 2016, in addition, 1 response was removed as the airline did not have any sales.
- *Airlines might have both internal and external providers for the revenue audit process.

25
ADM Market Analysis

Travel Agents- Market Area

Region Africa & Middle East Asia Pacific Europe North Asia The Americas

Total number of responses* 211 148 396 62 139

% 22% 15% 41% 6% 15%
Admin cost per ADM
Average in USD 42.76 48.08 41.43 45.52 59.99
0 USD - 20 USD 23% 26% 23% 27% 14%
21 USD - 40 USD 20% 14% 26% 19% 17%
More than 40 USD 27% 30% 30% 19% 42%
Does not know 16% 18% 15% 26% 11%
Admin cost per ADM allocated to External Parties
Average in USD 14.10 15.01 10.54 14.91 19.26
0 USD - 20 USD 41% 43% 48% 34% 39%
21 USD - 40 USD 8% 7% 7% 10% 7%
More than 40 USD 5% 7% 6% 8% 13%
Does not know 32% 31% 34% 40% 25%
Best way for IATA to promote best practices from the ADMWG
ADMWG Website 36% 39% 36% 60% 46%
E-mail 83% 82% 79% 85% 86%
Monthly Conference Calls 7% 11% 4% 6% 17%
Monthly Newsletter 35% 44% 40% 24% 42%
Other 7% 9% 4% 5% 8%
Main source of information for travel industry news
Blogs 9% 14% 9% 21% 19%
Digital Press 57% 66% 72% 73% 68%
Facebook 23% 32% 16% 10% 22%
LinkedIn 6% 10% 8% 5% 9%
Other sources 24% 27% 16% 18% 24%
Social Media(s)** 0% 0% 0% 44% 0%
Specialized Magazines 36% 41% 46% 27% 45%
Specialized Newspapers 27% 29% 25% 29% 30%
Twitter 8% 6% 3% 2% 9%

26
ADM Market Analysis

If IATA were to provide you with ADM business intelligence tools such as monthly dashboards, what main purpose would you find for it?
Benchmarking 29% 30% 23% 45% 27%
Decrease operating costs 71% 67% 63% 81% 69%
Gain market intelligence 48% 41% 33% 60% 37%
Identify key trends and patterns in your
organization’s 45% 40% 31% 31% 45%
Identify new opportunities 34% 36% 32% 31% 41%
Other 4% 8% 5% 2% 5%
Return of Investment (ROI) 28% 26% 15% 16% 27%
Preferred method of communication with the Airlines
BSPLink/ASD 60% 59% 55% 44% 58%
E-mail 86% 85% 85% 87% 81%
Other 16% 17% 14% 32% 20%
Preferred method of communication with the GDSs
BSPLink/ASD 35% 38% 28% 34% 40%
E-mail 89% 85% 84% 82% 80%
Other 16% 22% 24% 31% 27%
Rate of the communication with the Airlines regarding ADMs
Average 4.3 4.9 4.7 5.5 5.1
Most common answer (rate) from every region -> 5
Rate of the communication with GDS’s regarding ADMs
Average 5.2 5.5 5.2 6.1 5.7
Most common answer (rate) from every region ->5
Rate the Airline-Agent relationship for ADMs in general
Average 3.9 4.9 4.3 5.3 5.2
Most common answer (rate) from every region -> 5
Best place to dispose a central repository for important information
BSPLink/ASD 77% 84% 87% 71% 89%
IATA Customer Portal 49% 45% 23% 66% 41%
Other 13% 14% 11% 18% 16%
* Note:
* Three of the responses were removed from the data as they were provided by IATAN agencies with no representation in any BSP.
** The Social Media (s) option was included only in the survey to the Agents in China since the country has its own independent Social Media platform.
The average numbers in the market size segmentation are approximate as not all of the Agencies provided responses to all of the survey questions.

27
ADM Market Analysis

07 Key Opportunities & Recommendations

1. Reduce ADM Management 4. Elaborate ADM business intelligence tools 7. Improve the relationship between the
administration cost As for Airlines, design Business Intelligence parties involved in the ADM distributing
Travel Agents: Reduce the ADM tools with the view of improving chain
administration cost by identifying organizational positioning and Understand the particular challenges faced
solutions that will streamline and strengthening competitive advantages. by Agents and Airlines and mitigate the
simplify the ADM management process. For Travel Agents, provide Operational issues that cause friction in the relationship.
Airlines: Improve the cost proportion to tools that will help them to decrease Support a ‘blame free’ environment amongst
the industry by considering a lean and operating costs as well as to automate the ADMWG and extend to the whole
efficient revenue auditing system, as processes that could reduce manual labor. industry.
well as solving some root causes that 5. Optimize BSPLink/ASD communication 8. Enhance the communication deficiencies
may reduce the need for ADMs, thereby functionalities between Airlines, Agents & GDS
reducing the post-billing recovery - Enhance the communication - Standardize global ADM policies and
workload altogether. functionalities in BSPLink/ASD and processes.
2. Communicate effectively encourage a gradual movement to a - Stablish an open dialogue flow during the
Define an effective communication single and effective communication ADM process and foster a data driven
strategy to promote the ADM best platform between the parties involved action philosophy.
practices guideline to a global in an ADM research process. 9. Central repository for BSP information
community of Airlines and Agents based - Assist the GDSs so that they are Create a competent and unique source in BSP
in direct communication tools such as e- capable of supporting their customers Link/ASD that is easy for Agents to access,
mails and newsletters. through BSPLink/ASD accordingly. search and have visibility to reliable
3. Diversify Communication Channels 6. ADMs related to auto-priced information.
When publishing relevant ADMs news transactions: Standardize a vehicle for a 10. Airline standard dynamic ADM Policy
that could potentially impact the better interaction module
industry, use the predominant travel Facilitate a process in BSPLink/ASD that Host a module with the essential common
news channels (Digital Press, Specialized easily identifies an auto-priced transaction conditions for each Airline’s ADM Policy in a
Magazines and Newspapers & Facebook) and enables the GDSs to engage dialogue format that is flexible for Airlines to adopt
to reach the target audience. directly with Airlines in order to potentially and that can be easily understood by Travel
reduce the need for mass issuance of Agents and GDSs.
ADMs to Travel Agents.

28
ADM Market Analysis

08 Annex
Annex A: Survey results
1. Agent’s average administration cost of each ADM.

a) What is the average administration cost of each ADM (USD)?

Response Response
a) What is the average administration cost of each ADM (USD)? Count Percentage
Answered 812 84%
No Answer/ Not Available 156 16%
Invalid Answer equal or superior than 300 USD 89 9%
Valid Answers used for average 721 74%

b) Out of these, how much is allocated to external parties (USD)?

Response Response
b) Out of these, how much is allocated to external parties (USD)? Count Percentage
Answered 637 66%
No Answer/ Not Available 331 34%
Invalid Answer equal or superior than 300 USD 49 5%
Valid Answers used for average 588 61%

2. Airline’s average administration cost of each ADM.

a) What is the average administration cost of each ADM (USD)?

Response Response
a) What is the average administration cost of each ADM (USD)? Count Percentage
Answered 36 67%
No Answer/ Not Available 20 37%
Invalid Answer equal or superior than 300 USD 2 4%
Valid Answers for average 33 61%

29
ADM Market Analysis
b) Out of these, how much is allocated to external parties (USD)?

Response Response
b) Out of these, how much is allocated to external parties (USD)? Count Percentage
Answered 24 44%
No Answer/ Not Available 30 56%
Invalid Answer equal or superior than 300 USD 2 4%
Valid Answers used for average 22 41%

3. What would be the best way for IATA to promote best practices from the ADMWG to you and your community?

Agents

Response
Answer Options Percentage Response Count
Email 83% 791
ADMWG Website 40% 380
Monthly Newsletter 39% 376
Monthly Conference Calls 8% 74
Other 6% 61
Answered 98% 952
Skipped Question 2% 16

Response
Other Options Percentage Response Count
BSPLink/ASD 21% 13
Workshops/Webinars 11% 7
Through GDS 10% 6
Phone (Calls, Chat) 8% 5

30
ADM Market Analysis
Airlines

Response
Answer Options Percentage Response Count
Email 74% 39
Monthly Newsletters 62% 33
ADMWG Website 55% 29
Monthly Conference Calls 15% 8
Other 4% 2
Answered 98% 53
Skipped Question 2% 1

4. What is your main source of information for obtaining travel industry news?

Agents

Response
Answer Options Percentage Response Count
Digital Press 68% 651
Specialized Magazines 42% 402
Specialized Newspapers 28% 262
Facebook 21% 201
Other sources 21% 197
Blogs 12% 115
LinkedIn 8% 76
Twitter 5% 49
Social Media(s) 3% 27
Answered 98% 951
Skipped Question 2% 17

31
ADM Market Analysis
Airlines

Response
Answer Options Percentage Response Count
Digital Press 84% 42
Specialized Magazines 54% 27
Specialized Newspapers 36% 18
Facebook 20% 10
LinkedIn 14% 7
Blogs 12% 6
Other sources 12% 6
Twitter 6% 3
Answered 93% 50
Skipped Question 7% 4

5. If IATA were to provide you with ADM business intelligence tools such as monthly dashboards, what main purpose would you find for it?

Agents

Response Response
Answer Options Percentage Count
Decrease operating costs 71% 653
Gain market intelligence 42% 386
Identify key trends and patterns in your organization’s 40% 365
Identify new opportunities 36% 331
Benchmarking 29% 267
Return of Investment (ROI) 22% 205
Other 5% 47
Answered 95% 916
Skipped Question 5% 52

32
ADM Market Analysis
Airlines

Response Response
Answer Options Percentage Count
Gain market intelligence 57% 29
Identify key trends and patterns in your organization’s 55% 28
Identify new opportunities 55% 28
Benchmarking 55% 28
Decrease operating costs 47% 24
Return of Investment (ROI) 24% 12
Other 4% 2
Answered 94% 51
Skipped Question 6% 3

6. Agents and Airlines where asked; what is their preferred method of communication with each other?
Agents preferred method of communication with the Airlines

Response Response
Answer Options Percentage Count
Email 86% 821
BSPLink/ASD 57% 546
Other 17% 163
Answered 99% 956
Skipped Question 1% 12

33
ADM Market Analysis
Airlines preferred method of communication with Agents

Response Response
Answer Options Percentage Count
Email 79% 41
BSPLink/ASD 75% 39
Other 12% 6
Answered 98% 52
Skipped Question 4% 2

7. Agents and Airlines where asked; what is their preferred method of communication with the GDSs?
Agents

Response Response
Answer Options Percentage Count
E-mail 86% 819
BSPLink/ASD 34% 323
Other 23% 218
Answered 99% 955
Skipped Question 1% 13

Airlines

Response Response
Answer Options Percentage Count
BSPLink/ASD 32% 17
E-mail 85% 45
Other 13% 7
Answered 98% 53
Skipped Question 2% 1

34
ADM Market Analysis
8. Airlines where asked; does your airline have any agreement with GDSs for recovering ADMs that are related to auto-priced transactions?

Response Response
Answer Options Percentage Count
Yes 12% 6
No 88% 44
Answered 93% 50
Skipped Question 7% 4

9. Airlines where asked; in case an ADM is related to auto-priced transactions, would your Airline be willing to engage in direct dialogue with
the GDS?

Response Response
Answer Options Percentage Count
Yes 79% 38
No 21% 10
Answered 89% 48
Skipped Question 11% 6

12. Airlines and Agents were asked to rate the Airline-Agent relationship for ADMs in general on a scale of 1 – 10 with 10 being the most
positive:
Agents

Response Response
Ranking 1-10 Percentage Count
5 22% 190
1 15% 135
2 12% 108
3 11% 95
7 10% 83
4 8% 69

35
ADM Market Analysis
8 8% 68
6 7% 65
9 4% 35
10 3% 24
Total 100% 872
Answered 98% 948
Skipped Question 2% 20

Airlines

Response Response
Ranking 1-10 Percentage Count
7 26% 14
5 22% 12
8 20% 11
6 17% 9
3 4% 2
10 4% 2
4 2% 1
9 2% 1
1 0% 0
2 0% 0
Total 100% 52
Answered 96% 52
Skipped Question 4% 2

36
ADM Market Analysis

13. Agents were asked: On a scale of 1 – 10 with 10 being the most positive, how would you rate your communication with the Airlines and
with the GDSs regarding ADMs

Communication with the Airlines regarding ADMs

Response Response
Ranking 1-10 Percentage Count
5 24% 217
1 12% 111
7 12% 111
2 11% 97
3 10% 88
4 9% 77
8 8% 72
6 8% 68
9 4% 32
10 3% 23
Total 100% 896
Answered 98% 946
Skipped Question 2% 22

Communication with the GDSs regarding ADMs

Response Response
Ranking 1-10 Percentage Count
5 22% 197
7 12% 110
8 11% 97
1 10% 86

37
ADM Market Analysis

2 9% 84
6 9% 80
4 7% 66
9 7% 66
3 7% 63
10 6% 52
Total 100% 901
Answered 98% 947
Skipped Question 2% 21

14. Agents were asked where would be the best place to dispose a central repository for their Agency to access important information such
as query Airline's ADM policies, commission control setups and credit card acceptances?

Response Response
Answer Options Percentage Count
BSPLink/ASD 84% 808
IATA Customer Portal 38% 364
Other 13% 126
Answered 99% 957
Skipped Question 1% 11

15. Airlines were asked; please indicate the revenue audit process that is used by your airline.

Response Response
Answer Options Percentage Count
External party 67% 36
In-house audit 63% 34
External party, please specify 57% 31
Both External and Internal parties 30% 16
Answered 100% 54
Skipped Question 0% 0

38
ADM Market Analysis
16. Airlines were asked; please identify the critical information that is in your ADM policy.

Response Response
Answer Options Percentage Count
Conditions for ADM issuance 86% 43
Administration Fees associated with ADM issuance 62% 31
Dispute contacts 58% 29
Conditions of Revenue Auditing 48% 24
Other 18% 9
Answered 93% 50
Skipped Question 7% 4

39
ADM Market Analysis

Find out more about the ADM Contact us:

Reduction and Management
ADMProject@iata.org
Project:
www.iata.org/adm

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