Consultant Joselyn: ‘This snake has just slithered back into its hole’
United Airlines may grant some agencies
more than 60 days’ delay before cutting
them off from access to the airline’s credit
card merchant accounts.
The offer to go beyond 60 days was reflected in email to some affected agencies. The carrier had previously advised
the targeted agencies that they could have
“up to” 60 extra days to prepare for the
cut-off but that they would have to request
the delay.
In responses to various agency requests
for the delay, United employed language
suggesting that the carrier was willing
to work with the agencies as long as any
resolution favored the airline’s bottom
line.
In one instance, United said a 60-day
delay was “certainly an option” but added that the purpose of any delay would
be to find a solution that reduced United’s “payment costs” while providing
the agency with alternatives to which it
could transition “in a reasonable amount
of time.”
In the same message, United said it
wanted more information about the
agency’s business, saying the agency and
carrier might “jointly” find an “alternate
solution.”
In other cases, United granted “
approximately” 60 days or set a tentative date
of Sept. 21 for the cutoff. Some agencies
were offered the prospect of additional
time, as well.
One note said, “We are looking to see if
there are other alternatives that may meet
our goals … and still provide a solution for
your company.” Another said the carrier
was reviewing the situation “to determine
if any alternate solutions exist” that would
satisfy both parties.
United asked for suggestions from most
agencies along these lines but did not indicate what kind of solutions it was seeking.
At press time, United had not responded to Travel Weekly’s request for more
details.
Not all 28 agencies United targeted in
this process are asking for a postpone-ment.
One retailer who asked not to be identified described asking for an extension as
an “insult” and pointless. “It is a stay of
execution,” the agent said. “No matter
how I slice and dice it, [United] is still putting me out of business.”
In the agent’s view, United is employing
a divide-and-conquer strategy because if
all affected agents were cut off immediately, there would be more pressure for a
quick resolution to the issue.
Travel consultant Bob Joselyn sees United’s offers of delayed implementation as
a similarly sinister strategy.
“This snake has just slithered back into
its hole,” Joselyn said. “We need to keep
sending UA a message by hurting it financially. If the delay lulls the agency community into complacency, the delay will be
just the opposite of a victory.” — N.G.
disputes will be handled from a customer’s
perspective. Customers who charge their
tickets with travel agents will have the same
rights they have always had, including the
right to dispute charges to their card issuer
for nonperformed services.
United continued, “This is the case
when the impacted travel
agents use United’s merchant account; it will
continue to be the case
when the impacted agents
use their own merchant
accounts.”
In addition, United said, having agents
act as the merchants for United services is
“not unprecedented.”
United told lawmakers that requiring
customers to use agents’ merchant credit
card accounts worked with thousands
of agencies worldwide, adding that it has
“many current and long-standing relationships under which the travel agent acts as
the merchant of record. The ability to tailor our relationships and programs with
these agencies is paramount to our ability
to efficiently and effectively bring our service to market.”
Nevertheless, Arcuri said he would continue to fight United’s plan, citing implications for increased consumer prices and
possible job losses across the country. Besides, he said at an ASTA press conference
early last week, “United’s
explanations don’t add
up.” He said it was unclear how a limited application would save the
airline much money.
“We need real answers
and will continue to press
for that,” Arcuri said.
“The aim is to get United
to reconsider” and stick
with current business practices.
Continued from Page 1
UNITED
Celebration, caution
When United’s plans became known a
month ago, ASTA mobilized members and
worked with other concerned groups to focus government attention on the issue.
Paul Ruden, ASTA’s senior vice president for legal and industry affairs, said the
trade’s effort to get Congress involved has
been the “best grass-roots response from
our members” in his decades at ASTA.
He said member email continued to
“pour in,” usually advising of letters members had sent to their representatives.
Ruden also said that ASTA was hearing
from more lawmakers wanting additional
information.
He said agents can “all take a deep breath
and celebrate, but be prepared to re-engage.
There is much more to be done.”
Ruden said ASTA continued to believe
United’s move was just the first strike in a
broader plan. And he added that ASTA also
saw United’s actions as “signaling” other
airlines, a breach of antitrust laws.
Kevin Mitchell,
chairman of the Business Travel Coalition,
agreed, saying it appeared that United
wanted to “signal to
other carriers that the water is really nice”
and they should jump in, too.
He added that if United was really trying to save money on credit card costs, “the
real merchant fee costs are at the top of the
chain with corporations,” which is what
worries his constituents.
As for the card issuers, Ruden said,
i ll i ”
“We’ve been told the credit card companies
are concerned about how this will affect
them. … It disrupts established business
practices that have been in place since the
advent of the cards.”
That concern might be well-founded because, Mitchell said, “a lot of corporations
would revisit paying airlines by invoice,”
which would represent a major change in
processes and loss of business for card is-
suers.
Ruden said no lawmaker or government
agency disputed ASTA’s assertion that United’s proposal would undermine consumer
protections provided by the credit card system. This issue is “why it is important that
Congress stays involved. It may be neces-
sary to change some laws,” Ruden said.
The “other missing factor,” he said, is
that there is “no process to communicate
effectively with United to deal
with chargebacks” in the event
agencies are merchants. To
make things tougher from the
trade’s standpoint, in about 10
states, Ruden said, it would be
illegal for agencies to pass on merchant fees
to consumers.
Like Arcuri, Ruden said he was skeptical
of United’s intent. “We’re asking: Where is
the real explanation?” he said.
Analysts touched on the matter during
s
the carrier’s quarterly earnings call last
week.
Responding to questions, United officials
said they had to take such “aggressive” and
“risky” measures to make their distribution networks more efficient and enhance
revenue or save money. President John
Tague said
United had
to become
“more efficient about
the way we
distribute
the product, be that
improved
economics
or improved performance from our distributors.”
Tague said United had “a number of
agencies that have been merchants of record for some time.” He characterized the
latest move as “merely” an extension of
that approach.
As for the future, Tague said he could
not “speak to what we will do on a going-forward basis, but I think you can continue
to expect us to take calculated risks such as
these.”
CEO Glenn Tilton said, “There are no sacred cows,” adding that no analyst “should
be surprised by our aggressive pursuit of
those savings.”
ARTA in the act
Within the last 10 days, ARTA launched
a multipronged attack on United’s new
policy.
First, it asked the Department of Transportation to launch a rule-making procedure to investigate United’s move. In a
letter to the DOT, ARTA cited the ARC Industry Agent’s Handbook as evidence that
United is violating the terms of the sales
agreement in pushing ARC travel agencies
to be credit card merchants when selling
the carrier’s services.
Describing United’s slow rollout of its
new policy as “signaling,” ARTA said its
complaint to the DOT was
intended to deter
the carrier from
discriminating
against some
agencies and to
deter other air-
lines from instituting more such policies.
ARTA also wants to take its argument
that United is violating the ARC sales
agreement before the travel agent arbiter.
Because both parties must agree to arbitration, ARTA sent a letter to United asking
the carrier to agree to arbitration, arguing
this would “save everybody money.”
ARTA also asked ARC to “clarify” the
impact of United’s policy on ARC agencies. In a letter, ARTA asserted that ARC
agencies could risk violating the ARC sales
agreement if they become the merchants.
ARTA said the Industry Agent’s Handbook can be read no other way than that
the carrier is the merchant.
Allan Muten, ARC’s director of strategic communications, told Travel Weekly
that ARC did not see United’s move as a
violation of the ARC sales agreement. He
said each carrier can set its own credit card
acceptance rules.
Finally, ARTA and ARTA Canada late
last week asked United, in a letter, for a
face-to-face meeting “to open constructive dialogue.” The groups said they hoped
to resolve the issues in ways that work for
both the airline and travel agents.
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