How United Airlines is Looking To Reduce Its Debit Memos

by Robin Amster
Last updated: 1:33 PM ET, Tue November 8, 2016

Photo courtesy of United Airlines

United Airlines is seeking to be the industry leader in reducing the number of debit memos-a perennial problem for travel agents-through a host of developments it says has already saved travel agencies millions of dollars.

"What drives a lot of what we're doing is our sales division and our mantra that we want to be easy to do business with," said Craig Miller, United's director of revenue accounting. "They [sales] have challenged us to reduce debit memos."

"We didn't have the smoothest merger [between Continental and United], and we probably lost some of our customers," he added. "We needed to bring them back."

United in 2013 joined an Airline Reporting Corp.'s (ARC) debit memo working group composed of airline, travel agent and GDS representatives. Its efforts led to ARC's release of Memo Analyzer 2.0, an enhanced version of its subscription-based business intelligence solution which provides airlines and travel agencies a view of debit memos, benchmarking against industry metrics, and details on why a ticket triggers a debit memo.

The goal is to find ways to reduce the number of debit memos issued. According to ARC, close to 493,000 debit memos were issued for U.S. point of sale transactions in 2015. These totaled $143 million with an average per-memo amount of $289.

United was one of the first carriers to purchase Memo Analyzer, Miller said. But its efforts haven't stopped there, he added. The carrier has instituted several initiatives that have resulted in a reduction of about $3.2 million in debit memos in the last 12 months.

Among its initiatives:

• It has reduced its debit memo administrative fee charged to agents, from $50 to $40, saving the agent community $113,000.

• It has discontinued the practice of issuing debit memos for using incorrect waiver codes for involuntary exchanges due to weather as well as scheduled changes, saving agents $1.1 million.

• It has been proactively notifying agencies of booking class violations related to self-handling of involuntary reissues on future travel tickets. If the agency corrects the transaction prior to travel, United issues it a $40 administrative debit memo instead of one for the significantly higher fare amount. This class of service reduction led to $306,000 in savings.

• It has lowered debit memo amounts for certain credit card charge backs. Charge backs-where the credit card holder denies a charge-represent debit memos with the highest amount because they represent the full amount of the fare, said Miller. "A lot of these tickets never got used due to buyer's remorse," Miller said. "Instead of cancelling the ticket, customers charge it back to their credit card."

If the ticket was never flown United, Instead of writing a debit memo for the full fare, has instituted a sliding scale for the debit memo depending on the amount of the fare. United and travel agencies had been negotiating the amount of these debit memos "so we said why don't we just issue the debit memo for what is a lesser amount so there's no dispute, no back and forth correspondence. It has streamlined the process," Miller said. The practice has saved agencies $1.4 million.

• United was one of the first airlines to provide VISA with flight manifest seat assignment information which is part of a new "remedy" the credit card company introduced in the fall of 2015. Its goal is to overturn customer charge backs on flown tickets and shift the liability for those charge backs from the carrier and travel agency back to the customer. Since November 2015, United has provided VISA with flight manifest seat assignments for more than 4,000 charge backs and passed on $1.2 million in savings to agencies.

Miller explained that agencies don't have access to flight manifests. He said American Express this year announced it will provide the same remedy, making use of flight manifest seat assignments. However MasterCard will, so far, only use this information as "compelling evidence," meaning a factor to consider, instead of a remedy, he added.

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