How credit card merchant fees could change the face of air travel

Limbacher and da Rosa have additional concerns. "In order to buy directly from United, agents would have to have operating capital far beyond what they currently work with," says da Rosa. "The main concern would be our ability to gain enough credit to run a merchant program of any size, that the credit card company would grant individual small businesses that ability, simply because the price point is a lot higher than a restaurant or anything else," adds Limbacher.

Many travel agencies would likely fold if they are unable to obtain merchant agreements. Additionally, because of their size, airlines have negotiated the lowest merchant fees. Much smaller travel agencies would likely pay higher transaction fees, adding to the cost passed along to customers.

It seems like all the cards are stacked against travel agents. The airlines "really don't care about travel agents anymore because they don't need travel agents," says aviation expert and consultant Michael Boyd. "Travel agents don't make the decisions anymore; the consumer does, directly with the airline," says Boyd. "I understand travel agents' angst, but I can see where the airlines are saying, look, if you want to book it is fine, but we are not going to pay your costs."

While leisure travelers and independent business travelers may be able to purchase tickets on airline websites, larger companies still depend on travel management companies or agencies to help them control, track, administer and manage their travel programs. For corporations, "travel agents do bring some value added," Boyd admits, "but airlines are saying, we just don't want to pay for it. For a big corporation that wants somebody to manage their travel, that management is probably going to cost more money now."

While travel agents appear to be the targets of United's initial action, many believe the airlines are also trying to reduce the fees paid to the Global Distribution Systems used by travel agents to book flights by pushing corporate customers and travel agencies to book on the airline websites. This also concerns De Costa. Booking on airline websites, you lose that competitive advantage of seeing all the prices of all the carriers, she claims. "If you are just shopping on airline sites, you are only going to see their content and their prices."

In addition, booking through airline sites creates other problems for corporate travel programs. "All of our reservations are queued to a risk management system, so with the touch of a button, we know where our travelers are at all times," De Costa says.

Although United started with travel agents, Boyd believes credit card fees may eventually be borne by travelers no matter where they purchase their ticket – including airline websites. "Airlines could say, the fare is $100, and if you are going to pay with a credit card, the fee is $2.86. Airlines might go to that at some point for everybody," Boyd says. In that case perhaps travel agents may no longer feel they've been targeted unfairly, but it will be one more ancillary fee added to the price of a ticket if you use a credit card to book that trip.

Read previous columns

Send David your feedback: David Grossman is a veteran business traveler and former airline industry executive. He writes a column every other week on topics of interest and concern to business travelers. E-mail him at travel@usatoday.com.

Page
  • 1
  • |
  • 2
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...