Airline accused of shifting costs
United Airlines has ended the rights of some US travel agents to process credit card transactions from next month.
In a letter to selected agents this week, the airline said they will "no longer have continued access to United's credit card merchant agreements, effective July 20."
The airline said the ruling applied to but was not limited to: Visa, MasterCard, American Express, Discover, Diner's Club and JCB cards.
The agents were told to process cards under their own merchant agreements or settle in cash with United.
The carrier, one of the largest in the world and a leading member of the Star Alliance with Lufthansa, has been accused by agents in the US of trying to shift its distribution costs.
The American Society of Travel Agents (ASTA), in a letter to its members said United had confirmed its action.
It added that it was "not clear" why United had targeted only selected agents.
The letter said the implication was that agents would have to absorb "United's cost of doing business."
On top of this ASTA claimed that agent fees payable to ARC (the Airlines Reporting Corporation which is partly the US equivalent of IATA) would also go up.
By requiring agents to act credit card merchants for the carrier, it was passing the risk of chargebacks onto them.
The letter added: "The operational challenges, and costs, are also enormous.
"Travel agents have back office, mid-office, front office and consumer facing booking tools that must be reprogrammed to accommodate a change of this magnitude.
"Online booking tools do not have automatic controls that would allow an agent to refuse a certain airline's booking based on the form of payment or for the travel agent to automatically charge a customer's credit card as a merchant for certain airline transactions."
Another agent told ABTN: "It is my educated guess that United is clearly testing the market to see if it can move these costs to the distribution channel.
"Thus the reason for it becoming effective in a little less than a month from now. Again, my guess would be that it is waiting to see if it gets any reaction from the other carriers.
"Obviously this a de facto fare increase for the consumer, as well a potentially limiting the number of opportunities for the consumer to book travel.
"If successful it will be a great opportunity for United to drive traffic to its website. This is significant if you are either a "traditional" agency or an OTA.
"The next month could be very significant for this business - that's the understatement of the year!"
United's Star partner is currently engaged in a battle over it preferred fares scheme with Amadeus.
The two sides which have been talking for more than a year, hoped to reach agreement by July 1 but this has now been put back.
A spokesman for United said: "Credit card process costs are escalating at a high rate and represent several huindred million dollars each year.
"We are continuing to explore ways in the current economic environment to reduce distribution costs and run an efficient airline."
www.asta.org [1] www.united.com [2]