Future cost savings for the airlines?

British Airways won’t pay credit card merchant fees on negotiated corporate fares. Instead those fees have to be picked up by corporate clients. American Express sued over this but the lawsuit has been dropped.

British Airways still won’t pay the fees, but will no longer be a preferred supplier for Amex travel.

My guess is that with BA standing firm in their position not to pay credit card fees that these fees will become a major issue for other carriers as well. Just as airlines have cut travel agent commissions and pushed bookings to their own (less costly) websites, airlines may view credit card fees as a new source of savings moving forward.

    The settlement raises the question of whether other airlines will follow the lead set by BA and start to pass on merchant fees for corporate net fares. Many in the corporate travel industry had regarded it as a test case. At last week’s Corporate Travel World conference and exhibition in New York, Management Alternatives president Carol Ann Salcito presciently advised BTN’s Top 100 travel buyers to seek clarification from preferred airline vendors on this issue. “It is not certain how much this will cost you, but it can certainly be a negotiating point,” she said. “It creates 1.5 percent to 2 percent of added cost on average. When you go out to bid, ask carriers their intentions on merchant fees. If they say they are not going to pass on the fees, make them put that in writing.”

    Another question raised by the settlement is whether BA will refuse to absorb merchant fees for more fare types. Tiffany Hall, BA head of sales for the U.K. & Ireland, said there were “no plans” to do so.

“No plans” is a common type of “non-denial denial.” I fully expect this issue to come up with other kinds of fares in the future, if not from British Airways then from other carriers.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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