United Airlines by trying to foist credit card fees onto their agents is striking a blow against consumer protections offered by credit cards. Any way United slices their business, they are still, in the end, the service provider and should be liable to credit protections for services not rendered.
By shifting the credit card processing fees to travel agents, the credit card users will only have recourse against the agent should United fail to provide services. This newest United Airlines move to save themselves money comes at the expense of consumers across the country and their protection, not only at the cost of an additional three percent or so to travel agencies.
Janice Hough writing late last week in Tripso noted that additional problems will be created by adding a layer between the airline and the customer for everything from refunds and ticket changes to cancellations and mechanical problems.
This disconnect between the passenger and the airline (the client and the service provider) will have unintended consequences, should the airlines need refund airfares to make changes during a customer’s travels. Are the airlines now going to have to forward all necessary changes and credit card refunds back through the travel agent for approval? The paperwork and legal liability mess will be profound.
According to the Consumer Travel Alliance, a member of the Consumer Federation of America, even more worrying is the break between the airline and their customers from a contracting point of view and payment (consideration in legal terms). Should United, and other airlines, be allowed to force uncompensated agents to shoulder their credit card fees, legal experts will have to revise current contracts of carriage for these customers.
A situation will arise where passengers booked through travel agents, both brick and mortar and online travel agencies such as Expedia, Priceline, Travelocity, Orbitz and others have a different set of consumer protections and contract rights than those who book directly with United Airlines.
This United Airlines concept that has been “run up the flagpole” in order to test the ire it might create, is an ill-advised move by a flailing airline running out of ways to meet its cash demand requirements.
The Consumer Travel Alliance is writing to members of the House Committee on Financial Services and the Department of Transportation asking them to explore the ramifications of an action as that proposed by United on consumer protections and airline contracts of carriage.
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My guess is that this is a way to encourage those consumers who still buy from travel agents to move to United.com. There is no way that United pays the same level of merchant fees that small stand alone travel agents do, they have the bargaining power to reduce that fee substantially. It may also be a ploy to sell more travel insurance policies. I’m surprised they haven’t said no fee for using a United co-branded card and a fee for using another card – airlines in other countries do this.
I have to partially agree with Matthew. IT is a move to do more direct to consumer businesses. However, I disagree that it is a way to sell more travel insurance by United. It is a way for TRAVEL AGENTS to make more on high commission insurance policies by stating the facts stated in the article that “the airline isn’t responsible.”
The article is critically lacking in one point — what percentage of sales come from United directly, and what percentage comes from agents. If the split is 80/20 (majority booking direct), not a big deal from a cost standpoint, if it is reversed, that is a huge savings. Further, by driving people to United directly, United saves on commissions (yeah, I will get flamed by agents for that one) and the consumer saves on booking fees charged by companies like Priceline, Expedia, Travelocity, Orbtiz, etc. I have never once found a flight that was cheaper than what I could get by booking direct.
In the end — score one for the savvy consumer!
if United is having trouble with its ‘cash demand requirements,’ RAISE THE DAMN FARE!
Jason wrote: “Further, by driving people to United directly, United saves on commissions (yeah, I will get flamed by agents for that one) and the consumer saves on booking fees charged by companies like Priceline, Expedia, Travelocity, Orbtiz, etc. I have never once found a flight that was cheaper than what I could get by booking direct.
In the end — score one for the savvy consumer!”
Obviously, Jason has as big an issue with travel agents as his understanding of the industry is limited.
This issue potentially goes far beyond the issues raised in the space allotted to this column.
However, I will state that, as a travel professional, I’ve frequently obtained better fares than were available via the airline’s website and almost always arrange better schedules than presented by the airline as well. Remember, the airline’s going to show you what they want to sell, not what’s best for the traveler. Anyone who fails to take this into consideration in their travel planning is playing the game wearing a blindfold.
To Jason – An estimated 50% of all airline sales come from travel agencies/TMCs, so it is a very large problem for many leisure and corporate consumers.
see: http://www.asta.org/News/content.cfm?ItemNumber=1985#14
And, agencies have competitive pricing. Their fares were equal or lower 91.6% of the time :
http://www.etopaz.com/pdf/Internet%20vs%20Agency%202008%20-%20May%2009.pdf