United Airlines' controversial plan to shift merchant fees to 28 travel agencies was slated to go into effect today, but the airline is offering a 60-day extension to those who request one amid mounting opposition that has spread from the travel industry to Washington, D.C.
The American Society of Travel Agents today encouraged those few agencies impacted to take United up on the extension, as the group said it would continue to step up pressure on United to reverse the policy in the coming 60 days.
ASTA today hosted a conference call that featured other industry groups and U.S. Rep. Michael Arcuri (D-N.Y.) condemning United's policy. Officials on the call rebuked United's policy as an anticompetitive move that will raise costs for travelers, expand beyond the fraction of travel agencies initially impacted and encourage other airlines to match the policy.
United Airlines last month said that effective today it would discontinue access to its credit card merchant agreements, including those with Visa, MasterCard, American Express, Discover, Diners Club and JCB, essentially shifting payment card merchant fees from the airline to a handful of agencies
(BTNonline, June 25).
"Along with several of my colleagues, I have asked United to delay the implementation of this policy for 60 days so the potential impact can be reviewed in Congress," Arcuri said. "United has responded by sending a letter back explaining why they are enacting the policy, but they do not answer our request to delay the enacting of this policy unless an individual travel agency asks for a delay. This is not what we are asking for, and this is unacceptable."
ASTA, along with other groups and Arcuri, vowed to step up efforts to gain further support through both legislative and regulatory bodies in Washington, D.C.
In response to correspondence from concerned congressional representatives this month, United senior vice president Jeff Foland in a letter last week called the policy "very limited in scope, confined to a small number of agencies." Foland said the policy "in no way was intended to be a broad move in the marketplace, as has been interpreted by outside organizations."
Still, United agreed to shift the start date for agencies "that request more time to adjust to this change" as the carrier seeks to "ensure a smooth transition for the very limited number of impacted travel agents."
One such letter, sent on July 10 by 13 U.S. representatives, including Arcuri, notes, "In addition to shifting costs related directly to the price of air travel set by United to travel agencies and their customers, the policy appears to undermine the protections granted to consumers by the federal Fair Credit Billing Act."
United's Foland in his response—which ASTA senior vice president of legal and industry affairs Paul Ruden said arrived last week "at one minute before 5 on Friday"—denied the allegation, noting "there will be no difference in how credit card disputes will be handled from a customer's perspective. Customers who charge their tickets with travel agents will have the same rights they have always had, including the right to dispute charges to their card issuer for non-performed services. This is the case when the impacted travel agents use United's merchant account; it will continue to be the case when the impacted agents use their own merchant accounts."
ASTA's Ruden today said United confirmed 28 agencies were impacted by the policy. Of those, ASTA said it has identified 10 agencies, which Ruden described as geographically diverse, with the largest spending about half of a million dollars annually on United Airlines.
Ruden noted, "Some of the agencies viewed as a whole entity are not small," though they seem to have one thing in common: "They don't do much business on United for a variety for reasons."
Kevin Mitchell, chairman of the Business Travel Coalition, today said, "Some would say the practical effect of what United is doing is small because of the relatively few agencies involved. That sort of misses the point, though. It's the strategic implications for the health of the distribution system, for the efficacy of corporate managed travel program and for consumer protections that has resulted in such a backlash."
Officials from ASTA and other travel trade groups today accused United of signaling future pricing moves in the hopes that other carriers would join. To Mitchell, it's evident that "United's intentions go well beyond a handful of travel agencies."
ASTA president and chairman Chris Russo today noted, "The impact will definitely shutter some of those agencies, and if United is allowed to get away with this, you can be sure that other airlines are sitting on the wings and will follow suit, and still more agencies will be affected, which will affect jobs across the entire country."
So far, no other airlines have matched the move. During its earnings call last week, American Airlines wouldn't touch the subject, even at the prompting of UBS analyst Kevin Crissey. American CEO Gerard Arpey said only, "I think it would be inappropriate for us to comment about what we might or might not be thinking about where we're going with credit card fees and distributions costs generally, so I'm going to 'no comment' that one."