Airline unmoved by industry concerns
United Airlines was today (July 20) set to end the rights of some travel agents in America to process credit card transactions.
The airline has gone ahead despite substantial opposition for the US travel industry and some congressmen.
The airline wrote to selected travel agents in June saying they will "no longer have continued access to United's credit card merchant agreements, effective July 20."
It said the ruling applied to Visa, MasterCard, American Express, Discover, Diner's Club and JCB cards but was not limited to them.
The agents were told to process cards under their own merchant agreements or settle in cash with United.
The decision, seen as a move to cut the distribution costs of a struggling airline, ahs aroused strong opposition from the US travel industry.
The American Society of Travel Agents (ASTA) has called on United to withdraw the decision.
Thirteen US Congressmen wrote last week to United's ceo Glenn Tilton asking him to delay implementing the policy.
The United stance has also been criticised by the Business Travel Coalition (BTC), a prominent business travel pressure group in the States.
Chris Russo, ASTA's president, in his letter to David Myrick, United vp for sales for the Americas, called for the policy to be "rescind this policy immediately" claiming there were "many technical and
administrative issues that make United's Merchant Access programme impossible."
The letter said the Airlines Reporting Corporation's (ARC) Travel Agent Service
Fee (TASF) program - the US settlement programme - was designed to process service fees, not airline tickets.
It also had a limit of $500m limit on transactions processed through the programme.
Mr Russo also accused United of "requiring these agents to absorb United's cost of doing
business."
In their letter to Mr Tilton, the Congressmen said United's action might clash with the Fair Credit Billing Act.
They called on United to postpone its implementation for 60 days to enable "appropriate committees to evaluate the likely effects of the policy in an orderly way and, if necessary and appropriate, to take action to mitigate the effects of the decision."
Kevin Mitchell, BTC's chairman, called on United to say whether it was "making 'major or broad' moves regarding a credit card merchant fee cost-transfer scheme."
In response Jeffrey Foland, United senior vp for worldwide sales and distribution, said the airline had "not made any broad or major moves, having communicated directly with only a relatively small number of non-aligned agencies on commercial programme changes.
He added the airline had "no intention of taking the matter public."
At the time of United's decision, a US 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.
At the time, a spokesman for United said: "Credit card process costs are escalating at a high rate and represent several hundred 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.united.com www.asta.org www.businesstravelcoalition.com