The latest cost-cutting move by United Airlines may end up disappearing like many other ill-fated airline trial balloons. Or it may radically change the travel industry.
United has informed some unknown number of travel agents that they will not be able to use credit cards to purchase United tickets starting July 20. That’s right, <em>any</em> United ticket. If a customer wants to use their credit card, the agency would have to use their own merchant account to bill the customer, and remit cash to the airline. And only about two-thirds of agencies currently use such accounts.
Besides the additional 2 to 5 percent cost of using a merchant account, a cost that would almost certainly have to be passed on to the customer, this move would open up a Pandora’s box for agencies and their clients.
For starters, this puts the liability for undelivered service squarely on the agent. In the worst case, if United were to go out of business, instead of disputing the charge with the credit card company, clients would have to go back to the agency.
Even with regular refunds, an agency would have to get the money back from the airline first, before crediting the client. (Which could be particularly difficult if the airline refunded a ticket at the airport due to a delayed or canceled flight, because such refunds can take over a month.)
The situation is also a potential major headache for both agencies and corporate accounting offices, and in fact, personal accounting. Charges on an agency merchant account do not give ticket number or service details, so it will be harder to reconcile statements, and at tax time, keep track of expenses.
In addition, United’s new policy also puts the liability for chargebacks and credit card fraud squarely onto travel agencies. And while “brick and mortar” agencies might choose to accept the risk of accepting checks, online agencies will have no such option.
No doubt United sees this as a potential way to save credit card fees, and drive business to their own site. It also could help the ailing airline’s cash flow, as credit card companies hold back money before sending it to the airlines, and agencies have to remit payment within 10 days.
Because there are few details yet as to how many agencies received the letter, it is hard to know how potentially huge this situation could be in the near future. Travel agent organizations are already mobilizing to check the legality of the move, and others are already talking about booking away from United.
In an ironic twist, this move could even keep clients from using their United Mileage Plus Visa cards, from booking travel on United.
Stay tuned. I’s going to be an interesting summer.
Janice Hough is a California-based travel agent a travel blogger and a part-time comedy writer. A frequent flier herself, she’s been doing battle with airlines, hotels, and other travel companies for over three decades. Besides writing for Travelers United, Janice has a humor blog at Leftcoastsportsbabe.com (Warning, the political and sports humor therein does not represent the views of anyone but herself.)
