United passing credit card fees to some agents

[bicker]

http://www.msnbc.msn.com/id/31668781/ns/travel-news/

The travel agents are wrong. This quote demonstrates it most clearly:

"The credit card fee should be a cost of doing business by the maker of the product, whether it's an airline or a store," says Jean Covelli, president of The Travel Team Inc., an agency in Buffalo, N.Y.

By that logic, when you buy a television at Best Buy, should Sony pay the credit card fee instead of Best Buy? Ridiculous.

No one is saying being a travel agent is easy. Heck, I've been saying for years that there simply may not be a viable business model for a generalized travel agent, and that the only way a travel agent can really make a living is by offering, and charging for, additional services beyond that which the customer can secure for themselves. They should be charging the customer for their services, not trying to take a piece of their suppliers' pie. If a travel agent is offering something that represents a value added, then why wouldn't they be able to get a customer to pay for that added value?

 

[Lewisc]

I agree there may not be a viable business model for a TA. I agree the TA you quoted stated his case poorly (wrongly). Passengers pay for airline tickets with credit cards. I'm not even sure if an airline will accept cash at their ticket counter. Assume a credit card fee of 2% and money losing fare of $100. Airlines recieve $98 from a passenger who books direct but now wants $100 from a TA who books a passenger on the same flight. The credit card fee is the price of an airline doing business. They now want to avoid that price for customers who book through some TAs. Merchants aren't allowed to impose a surcharge for credit card transactions so TAs will be forced to pay this fee. I do see some issues in United's proposed policy.

A question of a fairness/anti-trust. These new charges, at least initially, will only be charged to a few TAs. I don't think large online TAs, such as Expedia or in house corporate TAs will pay.

United is telling the TA not to put through the charge through the airline

a United vice president told the agencies to report the sale to the airline as a cash transaction.

this may be an attempt to reduce credit card company hold backs

United could be trying to reduce the amount that credit card companies hold back from United to offset the risk that some of the tickets will be returned or not honored by the airline

This may also reduce the customers ability to charge back

consumers wouldn't be able to get their credit card company to resolve a dispute with United because the card transaction would be through the agent instead

The real issue is the consequences of a passenger paying the TA instead of paying the airline.

BTW the person you quoted is wrong, buying an airline ticket isn't the same as buying a TV set. My sale is with Best Buy not Sony. An airline ticket bought through a TA was with with the airline and was traditionally charged to the airline.

I don't think this rule will stick but I think airlines will find other ways to deter TAs from booking airfare.

Currently most TAs make zero, or almost zero, commission from sale of airline tickets. They either impose a fee or book tickets to accommodate customers booking vacations.

 

[bicker]

United is telling the TA not to pass along the credit card transaction fee to the airline.

He warned that agencies that try to assign the credit-card processing fee to United's account would be dinged $75 per ticket.

The consequences are immaterial because the passenger has the ability to book directly with the airline instead of the TA.

 

[Lewisc]

This will wind up being a contractual issue with the TAs, credit card companies and airlines.

It only affects the (very?) few passengers who still use a local TA. Maybe some of our parents or grandparents. I suspect it will affect 0% of passengers who post in internet forums.

Continental is presumably trying to control credit card fees by motivating customers into using their Continental/Chase credit card. Checked baggage fees are waived if you use a Continental credit card. This sounds like a better way of controlling credit card fees then going after the relatively few passengers ticketed through local TAs.

Airlines went from paying TAs a commission, to a small commission to no commission (TAs making money from fees). United now wants the TA to pay the airline a fee. You didn't have to quote United, the point is the TA can't pass along the credit card fee to the customer and has to absorb the fee out of whatever fee the TA is charging the customer.

 

[jlewisinsyr]

Additionally, many TAs charge a fee for booking air only or even air with a discount package (usually the fee is rolled in to the quote), I know Liberty Travel does this for a fact (I've booked a few more complex through my local agent) as one travel agent was helping me while mine was on vacation and charged me a fee, which was reversed by my travel agent when she returned and pulled my vacation. It was a small amount, but considering the amount we've spent with her, she thought it was ridiculous to charge me it.

 

[Lewisc]

Is your credit card charged by Liberty or by the airline?

 

[jlewisinsyr]

Is your credit card charged by Liberty or by the airline?

Liberty Travel is who charges our AMEX.

 

[bicker]

And so Liberty Travel should pay the transaction fee.

 

[jlewisinsyr]

And so Liberty Travel should pay the transaction fee.

Absolutely, but I think the point I was trying to make is they charge for the service already so although it could impact their profit margins, its only impacting profits on a charge they already pass on to their customers in the form of a fee.

 

[Lewisc]

And so Liberty Travel should pay the transaction fee.

unless their agreement with the airline calls for something different. Reimbursing a TA, for an expense the airline would otherwise incur, is not only reasonable but is probably contractually required. Deciding to stop selling airline tickets through TAs is also reasonable. I'm not sure if unilaterally changing the terms of a selling agreement, with less then 30 days notice, is reasonable.

I may be reading too much into the quote but it sounds like United is telling the TAs to falsely report a credit card transaction as a cash transaction so United can avoid being responsible for the credit card fees.

 

[bicker]

Yeah, I think you are reading too much into it. I think they're telling them that the deal has changed, and nothing we've read indicates that they can't change the deal... kind of like Disney: "Hours and attractions subject to change."

 

[chartle]

http://www.msnbc.msn.com/id/31668781/ns/travel-news/

The travel agents are wrong. This quote demonstrates it most clearly:

"The credit card fee should be a cost of doing business by the maker of the product, whether it's an airline or a store," says Jean Covelli, president of The Travel Team Inc., an agency in Buffalo, N.Y.

By that logic, when you buy a television at Best Buy, should Sony pay the credit card fee instead of Best Buy? Ridiculous.

The relationship between Sony and Best Buy is not the same as an Airline and a Travel Agent. Agent being the important word.

According to the little bit of business law I had to take in college, an agent never owns the product being sold. They just represent the owner of the product, i.e. the Airline.

Its not like Best Buy purchasing a bunch of TVs from Sony and reselling them. Its more like a salesperson who strictly works on commission and is not an employee of the seller acting as a go-between between the seller and the buyer.

Any money they collect isn't legally theirs its the seller's.

They do the transaction, hand the money over to the seller and the item to the buyer (sometimes they don't do either one) and then get paid.

Similar to another kind of agent, a Real Estate Agent. Any incidental costs part of the transaction are paid by the seller or the buyer not the agent.

 

[bicker]

The relationship between Sony and Best Buy is not the same as an Airline and a Travel Agent. Agent being the important word.

Agency is something granted, not taken. So the conditions of agency are up to the master, exclusively; not up the agent. If the agent doesn't like the terms of agency, the agent can decline the agency. And so any travel agent that doesn't like this change can stop selling United tickets.

When you purchase cell phone service, you often do so through an agent, such as Radio Shack. In that case, Radio Shack is actually signing a contract with you on behalf of their master, the cell phone provider. You pay for the phones (which incidentally incur on you a service commitment with the cell phone provider) and pay the first month's service fee, with a credit card if you wish, swiped by Radio Shack, with Radio Shack paying the transaction fee.

 

[KINGBOBOFTHENORTH]

The main point here to me is that airline management consists of a bunch of idiots. Agents don't cost the airlines a penny unless they sell something and even then, in a commission-free era, nothing. So why not have a huge FREE workforce selling for you instead of penalizing them? If I'm a consumer and I book with a credit card on the airline's website, the airline has to pay the credit card company the same percentage fee as when I book through a travel agent. So now they want agents to pay the airline for the privilege of selling their product? Sheer stupidity.

BobK/Orlando

 

[bicker]

With respect, you don't understand the business. Each ticket that the airline has to pay a single penny for the sale of that they could have sold directly is a direct reduction of profit.

 

[jlewisinsyr]

With respect, you don't understand the business. Each ticket that the airline has to pay a single penny for the sale of that they could have sold directly is a direct reduction of profit.

Or in the case of a lot of tickets purchased from members of this site, increased deficit.

 

[bicker]

Too true.

 

[Lewisc]

Or in the case of a lot of tickets purchased from members of this site, increased deficit.

Too true.

You can't put the genie back in the bottle, you can't roll back time...pick your favorite cliche...but

The move from TA sold airline tickets to internet based purchases complete with multi-airline search engines and flight ranking by lowest cost lowered the transaction costs of airlines. I suspect it also lead to increased price sensitivity and contributed to lower fares.

SW doesn't allow its fares to be displayed by sites like Expedia.