July 22, 2009
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News: United Delays Action Against Travel Agencies
After being bombarded with numerous complaints and pressure from the Association of Retail Travel Agents (ARTA) over an anticipated change in United Airlines credit card processing procedure, the Chicago based airlines announced they will be delaying their plan for two months or more. At the center of controversy is United's plan to stop access to a limited number of travel agents from using their payment processing system to process credit card transactions. Airlines pay a nominal fee for each credit card transaction that an agent processes and till now United has incurred the expense. Some have felt the move to prevent agents from using the system is to ultimately eliminate travel agents. On the other hand, United claims the change only targets a small number of agencies and they have no intentions to bury the travel agency business. Furthermore, airline representatives say that over 100 travel agencies have already begun using their own payment processing systems and pay the fees themselves.
Representatives for the agencies say that United has sparked a battle over the credit card processing fee and it is sure to evolve into a full fledge war. United maintains that they are only trying to reduce costs. Experts say that such a move industry wide would save airlines billions of dollars. However, the cost saved by the big airlines would only be shifted to the small travel agency businesses and the end consumer as the cost would be tacked on to the price of the ticket. If agents begin charging consumers extra to pay by card, they would lose their competitive edge with the airlines and online travel arrangement websites. Agents also argue that the move would not end with credit card processing but would extend into other areas of the business.
The American Society of Travel Agents has spoken out against United's attempt to trample on agents by saying its members generated nearly $69 billion in ticket sales in 2008. Last week, 13 U.S. House of Representatives sent a letter to United urging them to delay the credit card processing change while the matter is being looked into. Congress has also shown interest in the situation and questioning whether or not the change would violate the Fair Credit Billing Act.