United Airlines Tells Travel Agencies to Eat Credit Card Fees

Posted by John B. Frank Friday, June 26, 2009

United Tells Travel Agents to Cover Credit Card Fees

Analysis by: GLG Expert Contributor
Analysis of: United To Shift Card Costs To Agencies
Published at: http://hudsoncrossing.blogspot.com

Implications: How widely adopted will this change be? What will the effect be on consumers? On OTAs? On the airline industry?

Analysis: It appears United has taken the next step in the airline industry's never-ending quest to lower distribution costs or at least get others to shoulder the burden for them... United today informed a currently unknown number of travel agents that they would no longer be able to use the industry reconciliation system, ARC, to process tickets which were paid for with a credit card.

United is asking these travel agents to process credit card transactions themselves and then report the sale as a cash transaction. Until now, when a travel agency (or OTA) has sold a published ticket on United (or any other carrier) the credit card is actually processed by the airline. As such, the airline is responsible for paying the 2-3% (in rough numbers) that Amex, Visa, Mastercard and Discover charge for using their cards. In the new world proposed by United, agents will process the credit cards themselves (presumably along with an additional consumer fee) and then remit the full amount of the ticket back to United. This would obviously save a considerable amount of money for United if widely adopted.

Still too early to tell what this means for consumers but if the airline industry adopts United's moves broadly, consumers may be forced to pay one more fee if they are not willing or cannot visit an airline's website...

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United Airlines, Travel Agencies, United Tells Travel Agencies to Cover Credit Card Fees

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