Airline vs. travel agents: Who's in the right?

The often-quoted head of Boyd Group International in Evergreen, Colo., which provides data and advice for airlines, airports and financial companies, has been saying that United Airlines' ploy to make travel agents pay some of the airline's credit-card processing fees is a good move by the struggling carrier.

"What they are saying to travel agents is 'Wake up and smell the Internet; we really don't need you as much,' " he said in a recent interview.

Chicago-based United has travel agents in an uproar after notifying some last month that they can no longer use the airline's merchant account. Instead, they must get their own accounts to take credit-card payments from clients and pay the airline in cash. That means agents, not the airline, would have to pay the per-transaction card fees to third-party merchant bankers. The fees typically range from 2 percent to 3 percent of the amount, or $20 to $30 for a $1,000 ticket.

Or else, the agents can do what many leisure and business travelers do from their home and office computers and mobile devices: Book the flights at united.com and key in the customer's card numbers and expiration dates. If they do that, the card fees again become the airline's responsibility, but, travelers would have less reason to go to a travel agent.

If forced to book online at airline Web sites -- as the carriers prefer because it's their most automated and cheapest channel -- agents say they would lose some of their ability to hunt down the best deals for clients. And business customers would lose corporate discounts negotiated with airlines and available only through the global distribution systems agents use to reserve flights, such as Sabre and Galileo.

Kevin Mitchell, chairman of the Radnor, Pa.-based Business Travel Coalition, describes United's action as a "radical cost shifting scheme." If expanded and adopted by other airlines, it will put many travel agents out of business and result in leisure travelers and businesses paying more to fly, he said. Agencies still handle about 80 percent of business air travel, he noted, adding that many companies rely heavily on their travel-management services.

United, which lost $382 million in the first quarter after losing $5.35 billion last year, would pass on about $170 million a year in card fees to agents, according to an estimate from the American Society of Travel Agents. That group is lobbying hard for support on Capitol Hill to block the policy shift.

Other airlines struggling through a travel slump, which has hit first class and business class especially hard, will likely follow United's lead, Boyd said. "This will stick," he predicts. "United is probably at the vanguard of this."

United has said little on the issue, saying only that it needs to cut distribution costs.

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Travel agents may not like this, either. Rick Seaney, chief executive officer of FareCompare.com, has a new deal through the social networking service Twitter that could help business travelers save time and find discount fares. For those who sign up for the free service, the company will send alerts when an airline posts a fare sale for the destination requested, via Twitter. FareCompare then searches its database to pin down the flights where the fare is available, and provides a link to the airline's online reservation system. FareCompare makes all of its money by selling online ads to hotels, credit-card issuers and other companies. It gets commissions when the advertisements reel in customers for the advertisers, Seaney said.

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Clearwater, Fla.-based JetAmerica, which was selling one-way tickets for as little as $9 for flights between Newark and Toledo, Ohio, and other cities, said last week its planned July 13 debut will be delayed because of problems buying time slots to get in and out of Newark Liberty International Airport. The company is refunding about $500,000 to more than 6,000 people who purchased tickets.

E-mail: newman@northjersey.com

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