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ASTA, Agents Win First Big Round Against United

July 20, 2009 By: George Dooley


United Airlines' decision to grant travel agents a 60-day extension for implementation of the airline’s shifting of credit card fees to travel agents and consumers represents a major victory for agents and ASTA, who effectively mobilized grassroots and Congressional opposition to United’s policy that was to take effect today.

In a press conference held by ASTA and led off by Congressman Mike Acruri (D-NY), United’s policy came under intense fire from Acruri, ASTA, the Business Travel Coalition (BTC), the National Tour Association (NTA) and the Interactive Travel Services Association (ITSA), who worked together with ASTA to gain Congressional and industry opposition to United’s policy.

Arcuri stressed the adverse economic impact of United’s policy on travel agents, consumers and job creation. He noted that agents would have to pay substantially higher costs for credit card merchant agreement transactions. Calling the UA process convoluted and confusing, Arcuri questioned the economic sense of UA’s move and if it was a disincentive for travelers.

ASTA president and chairman Chris Russo warned that travel agents should be alert to the need for additional pressure to be brought to bear not only on United but on Congress as there is no clear indication from United that it has changed its policy— but simply delayed implementation. Russo and other executives warned of the possibility that other airlines could follow UA’s lead.

Paul Ruden, senior vice president of legal and industry affairs for ASTA, said the threat remained and that the support from Congress— ASTA gained support from both the House and Senate— had underscored the critical nature of UA’s policy which would transfer cost to agents and consumers. More work has to be done, Ruden said, including garnering more opposition to UA’s program in Congress.

Ruden said that the issue has been raised with the Department of Justice, the Department of Transpiration, state attorney generals as well credit card companies. “Agents response to the crisis has been excellent but we have to be ready to re energize ourselves if we are to win,”  Rudent said. United’s lack of consistent communication also came under fire from Ruden who said it appears UA is giving different audiences different responses.

The BTC’s Kevin Mitchell said United’s cost shifting would impact many, and that the health of the distribution system was at stake. He said the backlash against United’s was justifiable and warned that unless agents and the industry defended itself vigorously that other airlines could follow United's cost shifting move. Mitchell also expressed concern that UA’s moves were signaling other carriers.

In United’s July 17 response to Congressman Arcuri and 12 other members of the House who wrote to United to protest the move, United continued to insist that only a limited number of agents would be impacted by the change. And UA denied that it was a “broad move” in the marketplace. United also defended the action, claiming it is withinthe Fair Credit Billing Act on how credit card disputes will be handled. Jeff Foland, senior vice president, worldwide sales and distribution, signed the UA response to the Representatives, saying:
“We understand that you are concerned about the potential impact for consumers and the impacted travel agents with whom we transact business. In response to your request, we will individually notify and assist the impacted agents that request more time to adjust to this change, providing up to sixty additional days to transition. This will help to ensure a smooth transition for the very limited number of impacted travel agents.

"In an effort to further clarify our action and respond to your concerns, we would like to address some specific items regarding this issue. First, this action was very limited in scope, confined to a small number of agencies and in no way was intended to be a broad move in the marketplace as has been interpreted by outside organizations.

"Second, this action is not unprecedented. United has commercial arrangements with thousands of agencies worldwide to distribute our services, and 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. United understands the value that travel agencies provide to our success and will continue to tailor commercial programs and invest accordingly in those relationships.

Finally, this action neither violates nor undermines the Fair Credit Billing Act. There will be no difference in how credit card 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 non-performed services. 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.”

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