United plan could put huge costs on passengers
As of July 20, it will ask some travel agents to pay with cash, not credit. The move could make it harder for passengers to get back money for canceled flights, critics say.
United Airlines is trying to shift more costs onto some travel agents and consumers, a move that is attracting heat from some members of Congress.
In an initially little-noticed step earlier this year, United notified a small number of travel agents that starting July 20 they would be required to buy tickets for their customers with cash rather than through the airline's credit-card system, which has been the industry practice for decades.
Industry analysts and travel agents soon cried foul, saying the move could shift hundreds of millions of dollars in costs from the airline to its passengers and travel agencies. They said it could also leave passengers, who have consumer protections built into their credit-card purchases, with no recourse against United if a flight is canceled and they have trouble getting their money back.
This week, several members of Congress wrote letters to United Airlines CEO Glenn Tilton, urging him to reconsider the move because it could violate consumer protections outlined in the federal Fair Credit Billing Act.
"The protections in question, which include the right to dispute charges for non-performed services, have been an important safeguard for consumers," stated a letter from Sens. Ron Wyden and Jeff Merkley, Democrats from Oregon. "The newly announced policy appears to shift both the costs and risks to those who are least able to contest such disputes: certain travel agencies and the American traveler. Such a change, hastily finalized during uncertain economic times, greatly concerns us."
United spokeswoman Robin Urbanski said in an e-mail that the company would respond directly to the senators and representatives. She added that the move would affect only a small number of travel agents.
"This change was to a very small number of travel agencies to manage their performance by using an economics-based program that will create value for both of us," Ms. Urbanski wrote. "Travel agents that closely align and partner with us receive distinguished benefits for doing so...."
But, requiring these agencies to pay cash for tickets could result in "a wholesale transfer of the financial risk to the consumer," says Kevin Mitchell, chairman of the Business Travel Coalition. That's because the tickets will be processed through the travel agents' credit-card agreements, not those of United Airlines. As a result, if a customer has a dispute with United about the ticket purchase, the credit-card companies will no longer, in Mr. Mitchell's words, "have your back."
Mitchell and other analysts also worry that this is a pilot project which will eventually be extended to other travel agents. The American Society of Travel Agents estimates that could result in a shift of up to $171 million dollars in fees annually to travel agents and their customers.
United insisted in a July 2 letter to Mitchell that it has no plans to expand the experiment beyond a handful of travel agencies.
There's also concern that if United succeeds, other carriers will follow suit, just as they did after United first introduced fees for the second checked bag. Some then started charging for the first checked bag.
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