I first thought that United Airlines’ decision to tell some travel agencies that they could no longer access the carrier’s merchant account was a purely technical or "inside baseball" industry story with little or no consumer appeal.
It read like a classic intramural battle between a supplier and a distributor — a potentially major battle, to be sure — and I believed that any consumer story that began with an explanation of merchant accounts was likely to lose readers before the end of the first paragraph.
In addition, historically it’s been risky for agent groups to even try to get consumers interested in the woes of travel agents. A dozen or so years ago, when ASTA tried to spin the reduction of base airline commissions as a consumer issue, the consumer press listened politely, then reported that here was yet more proof that travel agents were dinosaurs. And not only dinosaurs, but dinosaurs in denial of their pending extinction.
Most articles on the United merchant account story are found in travel industry publications, and the issue has been followed closely by reports in trade publications directed at banks and merchant account providers.
But the Associated Press has also sent a story on the topic over the wires, as did McClatchy-Tribune Information Services.
On the USA Today website you will find a column titled "How credit card merchant fees could change the face of air travel." It explains how this intramural industry fight could well cost consumers money. There were an impressive 20 comments under the article. Some were from industry figures, but many consumers weighed in on the topic, as well.
The Wall Street Journal’s "The Middle Seat" columnist, Scott McCartney, addressed the topic on his popular blog. McCartney adopted a somewhat neutral tone, but perhaps because of the headline — "Another airline fee? United passes on credit card service fees" — the comments under it include a lot of ranting against unbundled airline fees.
As for paying in cash instead of credit cards, one commenter wrote, "It would be tempting to start paying for tickets with pennies at their airport counters, if only we had the time."
Both Reuters and CNBC posted a Travelsavers press release on their sites that railed against United’s plans. And American Business Journals, which publishes business newspapers in several cities, printed an article headlined "United credit card policy could foul corporate travel."
Analysts are putting in their two cents’ worth, as well. There’s a posting on the website of the Gerson Lehrman Group, a sort of expert-opinion clearinghouse. Rather than seeing United’s move as further proof that travel agents are in deep trouble, an anonymous analyst on its website saw the action as confirmation of United’s desperation.
Under the heading "Implications," the member of the GLG Energy and Industrial Council wrote, "This is likely an indication of extreme financial difficulties. … Conclusion: United may be closer to the brink than previously understood."
In an accompanying analysis, the language is blunter still. The writer notes that "highly sought" premium-class business travelers are among those who still use travel agents, and that if additional travel agent fees are imposed only on United tickets, it will amount to a competitive disadvantage for United.
"United has a tendency to shoot itself in the foot on occasion," the analyst wrote, "and it appears they are keeping that tradition alive and well. … The financial demise of United appears to be at hand."
If, as Kris Kristofferson wrote, freedom’s just another word for nothing left to lose, there must be a wonderful sense of freedom felt by United; it can release any trial balloon it wants, and who knows? It might just stay aloft, and the airline will survive long enough, in the name of cost reduction, to try something else that breaks from current standards of airline behavior.
The freedom United is experiencing is also the freedom of selling a commodity. One consumer wrote on the Wall Street Journal site that "we travel on whatever airline we do because it’s the only option or they are the cheap one. … That drives us. No matter what they do, we continue to use [them]."
For a commodity, much hinges on whether the seller appears to be providing the lowest price. By unbundling or coercing travel agents to charge fees not in the base fare, United makes it increasingly difficult for consumers to make apples-to-apples comparisons about the true cost of taking one carrier versus another. Fares become, if not opaque, a milky translucent. Consumers can no longer clearly see what the final cost will be without asking a lot of questions.
If the merchant-account flap is indeed a trial balloon, it appears to have more than a trace of lead in it. In most of the articles mentioned above, there is a modicum of understanding expressed for United’s desperate financial position, but now that members of Congress have weighed in against United, and other airlines are slow to support this new practice, I would think the airline must be seriously considering whether to just drop the whole idea.
If it doesn’t, United will surely be testing the assumption of the reader who commented, "No matter what they do, we continue to use them."
Contact Arnie Weissmann at [email protected], or follow him on Twitter at twitter.com/awtravelweekly.