What is an airline reporting bond?
An airline (or ARC) bond is a surety bond that the Airlines Reporting Corporation requires of travel agents. Before receiving important travel-related information and distributing tickets to consumers, travel agents must obtain this bond.
An ARC bond is a financial guarantee for airline carriers, ensuring travel agents collect and send payments and follow all rules and regulations per the Agent Reporting Agreement. Essentially, this bond ensures that travel agents pay airline companies and ARC for transactions they make through ARC’s global distribution system. It protects carriers and the ARC financially if agents commit unethical business practices.
By posting this bond, a recipient becomes an Accredited Travel Agency and can issue ARC Traffic Documents for an airline carrier.
Examples of ARC Traffic Documents
- Automated ticket/boarding passes
- Prepaid ticket advances
- 4-flight manual tickets
Get Your ARC Bond:
- Before receiving important travel-related information and distributing tickets to consumers, travel agents must obtain this bond.
- If you’re a travel agent, agency, or other business that offers consumer airline transport, you may be required to post an ARC bond.
- The Airlines Reporting Corporation bond requirement is typically between $10,000 and $70,000.
Who needs an ARC bond?
If you’re a travel agent, agency, or other business that offers consumer airline transport, you may be required to post an ARC bond. After acquiring this bond, you may gain accreditation from the Airlines Reporting Corporation to obtain necessary travel-related information and sell airline tickets.
How does an ARC bond work?
The bond is an agreement among three parties:
- Obligee: The Airlines Reporting Corporation requires the bond.
- Principal: The travel agent or agency obtains and posts the bond.
- Surety: A financial institution underwrites, issues, and backs the bond.
If a travel agency fails to make payments as agreed, an airline carrier may file a claim against the bond. The surety company will determine whether the claim is valid through investigation. If it is, the surety may compensate the airline for their losses – up to the full amount of the bond. The travel agency will then need to repay the surety for the same amount.
The cost of your ARC bond may depend on your financial history, business experience, and the bond amount you’re required to post. The Airlines Reporting Corporation requires you to post a $20,000 bond the first year. You could pay as little as 1-3% of the bond amount ($200 to $600) for your annual premium.
After the first two years, your required bond amount and premium cost may change, depending on your average monthly net cash over 12 months. Bond amounts may range anywhere from $10,000 to $70,000.
The state requires a travel agency bond (or seller of travel bond) to ensure a travel agent remains compliant across all bookings (airline, cruise lines, resorts, etc.). An ARC bond is required by the Airlines Reporting Corporation and pertains only to airline compliance. In the case of the travel agency bond, the surety protects the state’s interests. An ARC bond protects airline carriers.
An ARC bond must remain valid to continue your ARC accreditation as a travel agent. Renew your bond annually to remain compliant (until you wish to cancel it). Your surety also has the right to cancel your ARC bond at any time by giving a 30-day written notice.
Get an ARC Bond in Your State
ZipBonds offers the fastest and most secure option for getting the license and permit bonds you need. Our all-digital platform is intuitive and straightforward. Apply today online, or call us at 888.435.4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.