You have to have a heart of stone not to feel some sympathy for the airline industry because of the enormous amount of money it pays to credit card companies.

True, it's only 3% or so, but a major airline that gets 85% of its payments by credit card could easily pay more than $50 million a year in merchant fees to Visa, MasterCard, American Express and all the rest. Small wonder, then, that airlines have been looking for ways to reduce that cost, and small wonder that ARC has been exploring an incentive program to get corporations to pay in cash.

The math, however, simply isn't on the airlines' side.

Let's say the airlines offered a cash rebate of 1.5% to commercial accounts that switch from plastic to cash. The buyer loses the float from the card and the data stream from the credit card company, and its travelers lose the benefit of all the perks, points or frequent-flyer miles that come with the card.

It's hard to see how that's worth one-and-a-half points. On a $1 million account, it's $15 grand -- a close call.

If there's a travel agency in the mix, it gets worse. The agent has to extend credit to the customer for at least one reporting period and probably several, or talk the client into setting up a cash reserve. And then there's the question of whether the agent will get to keep any part of the 1.5%.

For agent and client, 1.5% just doesn't cover it. The airline, of course, could offer more. It could offer 2%, but at that point the program might not be worth the bother.

This suggests to us that the credit card companies have priced their services just about right.

The airlines, of course, could counter that it's unfair that agents and clients derive benefits from the use of plastic without incurring anything near the costs that the airlines have to pay. This is true. Life is unfair.

But it's unfair to everybody. Every merchant, everywhere, pays the credit card merchant fee. Memo to airlines: It's called a cost of doing business.

We might be more sympathetic to the airlines' plight if they were a little more creative.

Like a lot of airline "cost-cutting," a rebate program such as this doesn't really reduce costs at all. Rather than create some new efficient process, the rebate idea would simply move a cost item off the airlines' ledger and onto somebody else's, while creating extra work for others -- a stratagem that should be all too familiar to experienced airline agents, employees, customers, GDS providers and other vendors.

While the rebate idea was pushed to the back burner, we have no doubt that it will return, along with other ingenious airline proposals to rid themselves of what they see as this pesky "distribution cost."

These proposals might find a more sympathetic audience if they introduced new efficiencies into the process.

In the meantime, hold on to your wallets.

Seeing the light

If you need a reminder that our aviation security apparatus is still encumbered with window-dressing and feel-good policies that don't add much in the way of security, refer to the news item that the TSA is lifting the ban on cigarette lighters in commercial aircraft.

We are now being told that lighters, once a security threat, are no longer to be treated as such. This comes after the government confiscated 11 million lighters from air travelers last year. Yes, 11 million.

How's that for fraud, waste and abuse?

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