Penalties under new booking policy are Delta’s prerogative
Mark Pestronk is a Washington-based lawyer specializing in travel law.
Q:I am totally shocked and disgusted
by Delta’s new policy that it is going to start taking money from
agencies’ ARC accounts for so-called
Where does Delta get the right to charge
my agency a penalty? Is there any limit on
how much Delta can charge?
What gives ARC the right to take
money from my account without my
Can I defend against this onslaught of
A:Delta has reached a new low
in anti-agent behavior. Its booking policy puts agents at a disadvantage, its penalties are cruelly punitive
and the collection procedure is heavy-handed.
Under the pretense of maintaining the
integrity of its reservation system and sav-
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ing GDS booking fees, Delta has deliberately taken away several tools that sharp travel
agents have used for decades to save money
for their corporate and leisure clients.
Its flunky, ARC, is showing its true colors, which belie its recent happy talk about
being the agent’s friend.
However, since ARC’s newly asserted
right to take money from agents’ accounts
for debit memos might soon be the subject
of litigation, I will not comment on ARC’s
legal problems here.
Unfortunately, Delta does have the legal
right to prohibit agents from doing anything it wants to prohibit agents from doing. This right is inherent in the principal-agent relationship under U.S. law.
No law requires Delta to have the same
rules for its own employees as it does for its
agents, so it has the right to prohibit agent
practices that it lets its employees get away
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You can reject
but Delta will
then be free to
lift your plate.
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Nor does Delta have to treat all agencies
alike; it can waive its booking policies for
some agents but not for others.
To make its booking policies binding on
agencies, all an airline has to do is send each
agency a notice (an email will suffice) stating what the policies and penalties are and
stating that an agency’s first booking after
the policy’s effective date will constitute the
agency’s agreement with the policy. The
notice can contain the new policy, or it can
simply refer you to a Web page to find it.
This kind of contract formation is very
common today, and the courts generally
uphold it, especially where the party taking
action admits that it received the notice and
that such notices have resulted in binding
commitments in the past.
After you receive the notice but before
you make any more bookings, you are free
to send Delta a notice stating that you reject
the terms, in which case they will not be
binding on you, but Delta will then be free
to lift your plate if it wants. So your only
choice is to take it or stop selling Delta.
There is no limit to the violations or penalties that Delta can dream up, as long as
the penalty has some reasonable relationship to Delta’s alleged loss.
For example, Delta could raise the new
penalty of $50 for “churning” to $100 per
reservation but not to, say, $100,000.
Although Delta has the legal right to
charge penalties, Delta’s notice about the
collection procedure is legally inadequate.
Delta states that it “reserves the right to use
ARC Payment Express to recoup” the penalties, but most agencies have no idea what
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To submit a question for Legal Briefs,
email Mark Pestronk at mark@pestronk