Learn about airline reporting bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Airline Reporting Bonds?
Airline reporting bonds are also known as ARC bonds, because they are a requirement of the Airline Reporting Commission (ARC). They are a type of financial guarantee bond designed to:
Ensure that payments for airfare collected by travel agents are sent to the correct airline company
Guarantee that payments due to ARC are forwarded by travel agents
Provide financial protection to airlines and the ARC against malfeasance by travel agents
Travel agents must obtain an ARC bond in order to be accredited by ARC to receive travel-related information and distribute airline tickets. The bond must be renewed every year for as long as the travel agent is accredited by the Airline Reporting Commission.
Who Needs Them?
Travel agents and agencies applying for accreditation by the Airlines Reporting Corporation are required to obtain an airline reporting bond. This should not be confused with a travel agency bond, which is a state requirement unrelated to the ARC. In some states, however, both bonds may be required.
How Do They Work?
The parties to an ARC bond are the Airlines Reporting Corporation (the obligee requiring the bond), the travel agency (the principal), and the company underwriting the bond (the surety). Failure to remit airfare collected from clients to the proper airline can result in the airline filing a claim against the bond.
When a claim is filed, the surety will launch an investigation to determine whether it is valid. Upon paying a valid claim, the surety will seek reimbursement from the principal, which is legally obligated to repay the surety.
What Do They Cost?
The bond amount initially required for travel agents applying for accreditation from the Airlines Reporting Corporation is $20,000. That amount can change after the first two years based on the travel agent’s average monthly net cash receipts during the preceding twelve months.
The premium a travel agent will pay for the bond depends on the required bond amount as well as the travel agent’s credit score and personal and business financial condition. The surety will set a premium rate that determines what percentage of the bond amount the travel agent will have to pay to purchase the bond. For applicants with good credit, the annual premium will be between 1% and 3% of the bond amount.
If you’re seeking accreditation from the Airlines Reporting Corporation, let our experienced professionals help you get the best rate on the ARC bond you’ll need. Use our convenient online system to apply for an airline reporting bond today.