BA Still To Net Out Card, Banks Nearly Indifferent
Despite American Express' pledge in late February to "reach an agreement" with British Airways on its decision to cease paying merchant fees charged by credit card companies next month (BTN, March 4), sources said BA is sticking to its guns. While the decision's impact on such card providers as American Express and Diners Club International remains to be seen, MasterCard and Visa issuers are not sweating. "BA can do whatever they want," said Gene Ryzewicz, a senior vice president in charge of the Salt Lake City-based commercial card business at JP Morgan Chase. "As to whether it's a threat, it's actually, in effect, an advantage for us relative to Amex and Diners to the degree that the card fee is broken out and identified, and then the users are better able to see that they're paying more for those products. In the end, it may be a little advantage for us." Rob Abele, president of U.S. Bank Corporate Payment Systems in Minneapolis, said, "The jury's still out from a marketplace reaction standpoint on how this goes over."
Asked whether they thought a threat could come in the form of the airline-issued Universal Air Travel Plan cards, which some carriers have been more aggressively pushing since they cost even less than bank cards, the corporate card executives were equally ho-hum. "Air is not the only function for a card," Ryzewicz said. Said Steve Abrams, senior vice president and head of global corporate payment solutions at MasterCard in Purchase, N.Y., "In the short term, say in the past six months, everything has been cost focused. Since midway through last year, airlines have seriously been trying to cut costs, so this could be another blip in that situation. There will always be programs where the air goes on another card, but they can't be standalone. Corporate travel goes beyond air." According to Abele, "We'd be crazy to say we'll never be disintermediated, but we still emphasize the impact of service as well as technology and price."
Washington, D.C.-based UATP president Richard Crum said there were "no new developments to announce" in terms of airline issuers seeking to co-brand with a MasterCard or Visa issuer, as American Airlines does with Salt Lake City-based GE Capital. Since such a relationship allows UATP cardholders to purchase goods other than air, Crum said, "Clearly it is something that opens the door for some accounts, but more customers than you might imagine choose just the air portion."
UATP To Test Agent Fee Processing, Courts Smaller Carriers
Meanwhile, Universal Air Travel Plan president Richard Crum said UATP's announcement in April of plans to test a function that allows travel agents to process service fees on UATP cards "has generated a lot of response." During its three-day annual conference last month, UATP also said airlines that do not participate in airline clearinghouses—including many small, low-cost and/or point-to-point carriers—told UATP they would be interested in membership if it were cheaper for them. In response, UATP has initiated an unnamed program to open membership to such carriers. "We're creating an alternative settlement system that's lower cost," Crum said.
More To Come On Hotel E-Folio
Just as it did at last year's National Business Travel Association conference, buyers can expect Visa U.S.A. in two months at NBTA in Salt Lake City to make a major announcement addressing the perpetual problem of providing hotel e-folio data. In 2001, Visa announced a partnership with JP Morgan Chase and Prime Hospitality to offer the electronic detail to joint clients (BTN, July 30, 2001). At the time, Hyatt Hotels separately also announced an e-folio initiative, providing some momentum to the e-folio movement sparked earlier by IBM. Though he would not elaborate, Michael Dreyer, senior vice president of commercial solutions for Visa U.S.A. in San Francisco, earlier this month said, "There will be some things coming up." Indeed, hotel e-folio is the "next area of focus" for MasterCard, according to Steve Abrams, senior vice president and head of global corporate payment solutions. "It's not real soon, but we're delving into that and making some progress," Abrams said. "We're doing some testing. There is no Airlines Reporting Corp. in the hotel industry, and you have multiple hotel chains with global data. We're setting up the channel first."
IATA, Visa Partner For Smart Cards
The International Air Transport Association and Visa International last month announced they would establish a working group to develop an airline industry smart card standard. IATA director of passenger services Michael Feldman said, "Applications such as e-ticketing, biometrics and loyalty provide enormous opportunities for airlines. We need to maximize these opportunities by making sure a common infrastructure exists."