Three members of Congress representing South Florida have asked United Airlines to reverse a decision to force travel agents to the pay credit card fees when their customers buy tickets with plastic.
In a letter dated Wednesday, Lincoln Diaz-Balart, Mario Diaz-Balart and Ileana Ros-Lehtinen ask United CEO Glenn Tilton to change the company's policy, which is going into effect Monday, because of the burden it would impose on travel agents and travelers.
The agents have said it's an unfair move by United to shift a cost of its business on to their backs. They add that if other airlines copy United's move, it will end up costing consumers because agents will pass along the fee.
United, the nation's third-largest airline, sent notices to some travel agents saying they must pay the credit card fees when customers buy tickets with Visa, MasterCard, American Express or another card.
In the notice, a United vice president told the agencies to report the sale to the airline as a cash transaction. He warned that agencies that try to assign the credit card processing fee to United's account would be dinged $75 per ticket.
Credit card companies typically charge merchants between 2 percent and 3 percent of the transaction amount per card swipe.
United won't say how many travel agencies got the notice or exactly how they were selected. Some agents believe United picked on smaller agencies or ones that do little business with United to minimize the hard feelings if the airline drops the plan.
The move could push agencies to buy tickets for their customers on United's website rather than using one of the global airline ticket distribution systems such as Sabre and Galileo. That would force United to foot the credit card fees but avoid paying fees to the distribution systems.
It's easy to see why United would consider such a move.
United parent UAL Corp. lost $382 million in the first quarter after losing $5.35 billion last year, and some airline analysts rank it behind only US Airways in having the greatest risk of falling into bankruptcy protection.
Chicago-based United has been aggressively cutting costs to match a steep decline in traffic, especially in lucrative first- and business-class tickets. Like other airlines, it has imposed fees on baggage and other items, and expects to raise $1.1 billion this year with those charges.
''Credit card processing costs are escalating at a high rate and represent several hundred million dollars each year,'' says United spokeswoman Robin Urbanski. ``We're exploring ways in the current economic environment to reduce our costs and run an efficient airline.''
United spent $710 million last year on distribution costs, which includes payments to the distribution systems such as Galileo.
Roger King, an analyst with Credit Sights, said United could be trying to reduce the amount that credit card companies hold back from United to offset the risk that some of the tickets will be returned or not honored by the airline.
At this time last year, United had $382 million held back, or 25 percent of advance credit card sales. United reached a deal with Paymentech and JPMorgan Chase Bank to cut that amount to $25 million, but the amount would rise if UAL's cash balance declines. UAL would also have to post reserves with American Express if its cash balance falls below $2.4 billion -- it was $2.46 billion on March 31, according to regulatory filings.