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ASTA Vows to Combat United's Anti-Agent Policy

June 25, 2009 By: George Dooley

United Airlines' controversial plan to selectively prohibit U.S. travel agencies from continuing to report and remit credit card sales via the Airlines Reporting Corporation (ARC), effective July 20, drew fire from ASTA Vice President Paul Ruden, Esquire, ASTA's legal counsel. Ruden said United’s proposal represented a $171 million shift in costs from United to travel agents and questioned if the action would withstand antitrust scrutiny.

Ruden said ASTA would contact the U.S Department of Justice (DOJ) within days and take the travel agent case to Capitol Hill. “What is at stake here is the viability of an independent agency distribution system and ultimately the consumers right to choose,” he said.

Ruden said it would be difficult, perhaps impossible, for travel agents to comply with United's policy by the imposed deadline.  If other airlines were to follow suit the cost shifting could be in the billions.

Ruden said that travel agents have historically faced difficulty in obtaining their own or third party credit card processing. Agents who do not comply will be punished with a $75 fee. ASTA estimates that 63 percent of agents have merchant agreements with ARC.

Ruden also raised questions of the possibility of collusion between airline executives and said that cutting credit card costs has been repeatedly discussed by senior airline executives.  Ruden did not rule out the possibility of antitrust violations.

ASTA said that it was aggressively gathering more information on United ‘s policy and believes smaller agencies must comply with United's policy or be penalized. Such agencies will be required to process the client's credit card transaction using the agencies' or some third-party merchant agreement and, thereafter, report the sale to United, via ARC, as a cash sale. At press time, it was unclear how many agents would be impacted by United’s policy.

Agents will still be able to sell United’s tickets, provided agents settle with United using ARC’s cash settlement process. The change applies to all fares and products offered by United at locations owned and operated by your travel management company, United said. It can be speculated that United wants to drive consumer direct business to its website.

United also noted the potential difficulty of agents to get assistance from merchant acquirers. “However, please be aware that some acquirers consider travel a high-risk category and may require addition scrutiny during the application process,” United said in a statement.

In a June 19 letter signed by Dave Myrick, vice president sales for United said:
"Effective July 20 2009, the ARC location(s) listed below will no longer have continued access to United’s credit card merchant agreements, including but not limited to Visa, MasterCard, American Express, Discover, Diner’s Club and JCB cards. This change means that, on or after July 20, 2009, you will need to (a) process any transactions with those cards under your own merchant agreement(s), if any, and (b) settle in cash with United.  Continued use of United’s merchant agreements for the above cards on or after July 20 will result in a debit memo of $75 per ticket issued.  Questions or concerns regarding this policy change may be forwarded to [email protected].”

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