Here’s an interesting window into United’s potential motivation, from a travel agent newsletter.

In a regulatory filing last Friday the airline said it would raise an additional $175 million backed by aircraft parts. The airline has raised more than $1 billion over the past year by mortgaging aircraft, engines, parts and future frequent-flyer miles, but the amount of assets it has left to sell has dropped from about $3 billion to $1.7 billion. United and other airlines have been scrambling in recent months to raise additional cash amid expected losses this year from continued weak travel demand and higher oil prices. This highlights United’s need for cash and could be one of the reasons United is trying to get out of paying some of the credit card fees.

Not only are there vary real costs (cc fees) that the agency will have to pay but there’s also a lot of risk associated with this from the agency side. If anything goes wrong and the client protests the charge (Chargeback in credit card lingo), the agency not the airline is on the hook for the money. There is a vary real possiblity that the agency might get stuck for a few tickets. These are costs that the agency will have to build in.

From the client, there are also a ton of risk involved there. How many stories has Chris Elliot written where a Travel Agency goes out of business between the time they charge a client for the trip and they pay their supplier.? Suddenly, booking your ticket on United means your making a bet on your travel agency’s fiscal health and paying more for the honor of flying United. No thank you.

@Sir Wired: If your agency is working for you, why would they ever book you with a supplier that puts you at a higher risk and higher costs. Just doesn’t make sense.

As I understand it, United’s move will result in a significantly higher cost, assuming that the travel agency doesn’t absorb this cost. The agency that I deal with has a range of fees that start at $29.00 for a domestic ticket and go up. If I buy a complex domestic ticket and the price is $1000.00, the merchant fee of 3% to 5% will add on another $30.00 to $50.00 to the cost, so my cost will now be somewhere around $1059.00 to $1079.00 just to buy the ticket. And on international tickets where one can easily be spending $5000.00, that merchant fee suddenly balloons to $150.00 to $250.00.

I completely undestand why travel agencies would want to stop selling United, this is nothing more than an attempt to drive a wedge between travel agencies and their customers. United thinks that the customer is more loyal to the airline than their agency and that in order to save paying the merchant fee, the customers will buy online, directly from United, thereby eliminating travel agencies that give options and offer multiple choices.

I wonder how screwed up travel will be in five years!