United Airlines has recently circulated notices to some of their travel agents stating that they will no longer be taking the burden of credit card fees when customers purchase tickets through credit cards. The fees will have to be paid by the travel agents, instead.
United Airlines is the United State's third largest airline. Their latest announcement will affect a large number of agents when it begins on July 20. Credit card transactions for tickets carry transaction costs which used to be handled by the airline company. These charges range from two to three percent of the transaction amount. Once the content of the notices come through, the travel agents themselves will have to carry the costs of credit card transaction charges.
According to the notice, travel agents will have to pay the transaction fee for corporate or leisure customers who buy their tickets from them through Mastercard, American Express, Visa or some other credit company. The travel agents are being instructed to report these purchases as cash transactions. The company also warns travel agencies that, if they try to pass the credit card transaction fee to United Airlines, the company will charge their accounts with a charge of seventy five dollars per ticket.
The agents are naturally in an uproar over United Airlines' actions. Traditionally, it was the airlines responsibility to shoulder the costs of credit card transactions. Once the transaction costs are moved to the travel agencies, the agencies the cost of operating could be too high for them. Most likely, these agencies will pass on the cost to their customers.
Jean Covelli, Travel Team president from Buffalo, N.Y. Said that the credit card fee should be shouldered by the entity running the business, meaning United Airlines, as the cost of being the makers of the product. According to Covelli, their agency carries multimillion dollar accounts which means that the addition of a three percent transaction charge would be a formidable burden for them.
Although unpopular, the move is quite understandable considering United Airlines' current economic condition. Last year, UAL Corp., parent company of United Airlines, saw a loss of 5.35 billion dollars. During the first quarter of this year, their losses were at 382 million dollars. Analysts have already stated that United Airlines is just behind US Airways in terms of exposure to the risk of bankruptcy protection. The airline has seen an alarming decline in traffic, most of which were in their highly profitable first class and business class tickets. As a result, the airline is aggressively looking for ways to cut costs.